Indirect Channels


 
 
Concept Explanation
 

Indirect Channels

Indirect Channels

Indirect channel is when the producers sell their goods to consumers through middlemen. There are four types of indirect channels:

Retailers  The producers supply goods directly to the retailers, who further sell the goods directly to the consumers.

Wholesales The producers supply goods to the wholesales, who in turn directly sell the goods to the customers.

Wholesaler and Retailers   The producers supply goods in bulk to the wholesaler who further sell them in small quantity to various retailers. These retailers then sell the goods to the consumers.

Agents, Wholesalers and Retailers  The producers supply goods to the agents who act like middlemen for the wholesalers. The wholesalers then sell the goods to the retailers who finally sell the goods to the consumers.

Retail Trade   It refers to buying of goods from manufacturers or wholesales and then selling them directly to the consumers. People engaged in this type of trade are known as retailers. Most of the retailers buy goods from the  wholesalers or agents.

Functions

      ¯  Retailers ensure that the location of their stone is convenient.

      ¯  They make their store appealing as the physical layout of the store is very important to attract customers.

      ¯  Window displays, promotional advertising and distributing coupons are some strategies used by the retailers to attract more customers.

      ¯  The main aim of the retailer is to attract more customers.

      ¯  The retailers ensure that products they sell are as per the taste of the customers.

Types of retail trade

     1.    Vendors

     2.    Weekly markets

     3.    Single line

     4.    Chain store

Wholesale trade

It refers to selling of goods to traders in large quantities for resale to retailers. Wholesalers have to invest a huge amount of money to buy a large amount of goods. They also take a huge risk as they have to store the goods till the goods are resold to the retailers. Though they do not have to spend any money on advertising or window display, their profit margins are low.

                    Retail market

                Wholesale market

Products are sold in small quantities

Products are sold in large quantities

Retailers deal in many products

Wholesalers mostly deal in one product

It is done through shops and door-to-door selling

It is done in a big marketplace

There is direct interaction with ultimate customer.

There is direct interaction with the retailers and not the customers.

The profit margins are higher.

The profit margins are lower.

The investment and the risk factor are less.

The investment and the risk factor are higher.

Sample Questions
(More Questions for each concept available in Login)
Question : 1

What is the role of a retailer in the marketplace?

Right Option : D
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Explanation
Question : 2

People engaged in _______ trade are called retailers.

Right Option : B
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Explanation
 
 


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