In today’s article, we would be analysing the meanings behind the terms related to channel- ‘direct channel’, ‘channel width’ and ‘channel length’.
Exporting and Importing can often be an extremely complicated and mundane process as there are so many rules, regulations as well as countless number of procedures to adhere to. This, many a times, may require to prepare and submit documents for import and export. Usually, freight forwarders would prepare it for us, but it is also good to know for ourselves as to how to complete the relevant documents by understanding what the terms mean.
As such, in our new article series titled “Export Terms”, we would introduce you to all the various terms used in the international trade, be it through air, land or sea freight. We would roll out one related article on a regular basis, which would help you to get a comprehensive understanding as to the document preparation for the purpose of doing trade internationally.
What is Direct Channel?
A direct channel is different from the traditional type of channel for distribution of goods. A direct channel is actually referring to a different type of distribution channel, where it seeks to deliver goods straight to the end customer without a middleman (intermediary). This actually refers to intermediaries such as wholesalers, distributors, agents and retailers, basically any party that sits in between the supply chain of the consumer and the seller.
Using a direct channel is much cheaper as it removes the need to pass through other intermediaries. This means that the goods may take a shorter time to actually the reach the other hands of the customer. As such, reducing the long wait. Furthermore, since there are no middlemen, the overall cost of the product is also lesser, allowing the consumer to pay lesser for the same goods.
The advantage of a direct channel is that when the customer demands for the goods, it can immediately reach the consumers without any delay shortage of stock etc. It is common to find such sellers on online marketplaces, which usually control the supply of the products too.
How about Channel Length?
A channel length basically refers to number of individual middlemen (intermediaries) that lie between the customer as well as the producer of a supply chain. If the Channel is a direct channel, the length is zero as there are no middlemen to begin with.
What About Channel Width then?
Lastly, a channel width refers to the number of different entities available to perform the same type of function. Like retail, wholesale etc. If there are 2 retailers, the width for retail is 2.
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