A distribution channel is the route a product takes from the manufacturer to the end consumer. Choosing the right channel affects cost, speed and customer experience.
Direct channel
Producer → Consumer
No intermediaries
Higher margin kept
e.g. farm shop, manufacturer website
One intermediary
Producer → Retailer → Consumer
Retailer handles selling
Producer loses some margin
e.g. supermarket, Apple Store
Two intermediaries
Producer → Wholesaler → Retailer → Consumer
Wholesaler buys in bulk
Traditional model for FMCG
e.g. canned goods, newspapers
Modern Distribution
E-Commerce & Omnichannel Retail
E-Commerce distribution
Sell directly via own website (D2C)
Sell via Amazon, eBay, Etsy marketplaces
Delivery to customer's home — logistics are key
Click and collect — ordered online, collected in-store
No need for physical retail space
Omnichannel retail
Selling through multiple channels simultaneously
Seamless experience: in-store, online, app, phone
Customers can browse online and return in-store
Example: John Lewis, Next, Marks & Spencer
Increases reach but adds operational complexity
Trend: Many traditional retailers have become omnichannel — physical store closures alongside growing online sales. Businesses that failed to adapt (e.g. many high-street retailers) lost market share.
Practice Question 1 of 3
A crisp manufacturer sponsors a Premier League football team so its logo appears on players' shirts and is seen by millions of TV viewers. This is an example of:
ABelow-the-line promotion — targeted at specific football fans
BAbove-the-line promotion — mass media exposure to a large untargeted audience
CCost-plus pricing — adding profit to production costs
DDirect marketing — communicating one-to-one with consumers
Correct: B. Sponsorship is classified as above-the-line (ATL) promotion when it involves mass media exposure. The logo seen by millions of TV viewers is untargeted mass communication — reaching a broad audience. While sports sponsorship has some targeting (football fans), its mass TV reach makes it ATL in nature, unlike direct mail which targets specific individuals.
Practice Question 2 of 3
A food producer sells to a wholesaler, who sells to supermarkets, who sell to consumers. How many intermediaries are in this distribution channel?
ANone — this is direct distribution
BOne — just the wholesaler
CTwo — the wholesaler and the supermarket
DThree — wholesaler, supermarket, and consumer
Correct: C. The channel is: Producer → Wholesaler → Supermarket → Consumer. There are two intermediaries — the wholesaler and the supermarket — between the producer and the end consumer. Each intermediary adds a mark-up, reducing the producer's margin. Direct distribution (zero intermediaries) would mean the producer selling direct to the consumer.
Practice Question 3 of 3
A clothing brand sells through its website, its own stores, and via ASOS and Amazon. Customers can order online and return in-store. This best describes:
ADirect-only distribution — cutting out all intermediaries
BOmnichannel retail — selling through multiple integrated channels
CWholesaler distribution — selling in bulk to retailers
DAbove-the-line promotion — mass media advertising
Correct: B. Selling through multiple channels (own website, physical stores, third-party marketplaces) with a seamless customer experience (buy online, return in-store) is omnichannel retail. It maximises reach and convenience but requires complex inventory management and coordination across all channels to deliver a consistent brand experience.
Key Takeaways
What to Remember
ATL promotion — mass media (TV, radio, billboards); wide reach, high cost, untargeted