fbpx

Indirect Distribution Examples in IT Business

Indirect Distribution Examples in IT Business

In the 21st century, an IT-based business is likely to perform so well. As the owner, you should attempt to get everything right about running a successful IT business. One area you should pay closer attention to is the marketing and distribution of your product or services. A business can use both direct and indirect distribution channels. A direct channel means that a consumer will purchase directly from the manufacturer. On the contrary, indirect distribution means that a consumer buys a product from an intermediary. This can be a wholesaler, retailer, agent, or distributor. For this writing, we will consider indirect distribution methods at your disposal as an IT business owner. Before then, we will consider when it’s necessary to choose this channel of distribution.

Decide Correctly Concerning the Direct and Indirect Distribution

As a player in the IT industry, some factors will determine if you can control your target market or not. First, do you produce IT goods or services in an already flooded section? For instance, do you produce smart devices? Or do you create software or games, like The Big Easy slot? It could also be that you produce software for running businesses. If you are serving in an area that has intense competition, you cannot depend on direct distribution alone. The indirect distribution will help you take over your niche and control it like a professional. Having a strong understanding of the section of the market you are targeting is extremely important.

Why Choose Indirect Distribution? What Are the Benefits?

So far, we are assuming that you have made up your mind that you want to do indirect distribution of your IT product or service. Now you need to have more reasons to select this option.

So, read the benefits next:

  • If your IT products require shipping, and you cannot afford the cost alone, an indirect distribution channel is better because it entails third parties who also bear the cost of shipping.
  • Storage costs can be too hefty to bear on your own when using a direct channel. This is not the case with indirect channels requiring a few intermediaries to share the cost of storage space in a shipping truck or container.
  • Indirect distribution can facilitate the methods through which customers can find your products or services.
  • You can avoid handling a complex supply share on your own.
  • By linking up with third parties who can lighten your burden, you can have access to valuable tools and get more experienced in your job.
  • Having access to a large sales team you did not create is another plus.

Indirect distribution is all you need to distribute and market your goods. However, it has its challenges. First, you will have to tolerate a long distribution channel. Before the intended person receives your IT goods, they will deal with some intermediaries. A distribution channel that is long and complicated can lead to time loss or wastage. This method of distributing your goods does not allow you to relate with the customers directly. Hence, your efforts to create brand loyalty can amount to nothing. If you don’t want to incur the hefty start-up costs of creating distribution channels for your business, you can use indirect marketing first.

It will be time-consuming but will still bring the items to the intended buyers. Another challenge lies with finding indirect distribution partners you can trust. Once you find them, enter into a contract that is fair and transparent. There are unscrupulous business people everywhere, be very cautious when selecting who to partner with. As with supply chain management, you will need to manage your indirect distribution channels.

Examples of Indirect Distribution Channels

Examples of Indirect Distribution Channels

As a manufacturer of IT goods, you can choose between various indirect distribution channels. These include:

One-level distribution channel

In this kind of distribution channel, only one intermediary is necessary, and their work is to distribute your goods to the customers. You are dealing with a retailer who will sell the item directly to their customer. You will find various Smartphone manufacturers having authorized dealers, especially Samsung.

Two-level distribution channel

Here, two intermediaries are needed to transfer your IT goods from your factory or warehouse to the end consumer. In this regard, you need a wholesaler and then a retailer. These two will connect you with the end consumer. This method seems more viable than the one-level one because it can help you cover a wide market area. If you produce technology appliances like laptops or phones, this can be a perfect method of indirect distribution. It can also work if your IT items are purchased in small quantities by several people.

Three-level distribution channel

As the name suggests, you require up to three different third parties in your distribution channel. This works in a simple manner, such as having an agent who connects with a wholesaler and retailer. The agent becomes the next party to join your distribution line. This method can suit you the most if you have a small product line and several customers scattered over a large area. If you are trying out your product and have limited items to sell to customers who are all over the place, then you need to use this channel.

Four-level distribution channel

In this channel, there are four intermediaries between the producer and the end consumer. These are an agent, distributor, wholesaler, and retailer. If selling consumer IT products with a high consumption rate, choose the four-level channel of distribution. The burden of shouldering the costs of distribution will be manageable, seeing that there are several consumers.

Important points to note

From the above-mentioned paragraphs, there are important points to note. These are:

  • Sales can be made through a retailer. Whether retailers are a shop owned by one person or a huge retail store or retail chain store, the important thing to note is that goods are sourced from the manufacturer and sold to a final consumer. You can think of a retailer as an authorized dealer.
  • Sales through a wholesaler. As with the retailer, a wholesaler sources goods from a manufacturer and sells them to a retailer, who then resells them to a customer. Wholesalers buy in bulk, while retailers buy in smaller quantities. Then they distribute it even in smaller quantities to the consumer. A wholesaler is also called a stockist. Most FMCGs are sold via these wholesalers and retailers.
  • Sales through agents. Also, you have noted an agent comes in from the three-level indirect distribution channel. An agent is usually chosen by a large manufacturing business to help with difficult marketing activities. The agent links the manufacturer with the wholesaler. They can be a huge sale agent with a broad distribution network, many salespersons, wholesalers, and retailers. They don’t just distribute goods but also promote them on behalf of the manufacturer.

Conclusion

Indirect distribution involves the selling of goods through intermediaries. There can be longer channels than the four-level distribution channel. The one you should choose for your IT business depends on your production capacity and the kind of IT goods you produce.

It is important to select a channel while estimating total time and total cost. Unless you select the one-level channel, the process of delivering your goods to the end customer via other channels will be longer. But, as a manufacturer, you will be able to transfer the risk immediately once the next person pays and passes the goods to the next one in the channel. Finally, indirect distribution can be so effective in terms of the cost of storage and shipping when you are a small-capacity producer.

 

Comments are closed.