Channels of commodity circulation, or how your product will reach the consumer

Today the system of commodity circulation and sales channels are an integral part of the development strategy of any company, allow it to expand its sales markets, increase the customer base, and increase the competitiveness of its products. In this regard, when building a company's strategy, it is necessary to take this system into account.

The system of commodity circulation in marketing is a complex of processes for the movement of goods, which includes such elements as: order registration, warehousing, control over the quantity of goods in a warehouse, transportation. At the same time, for the construction of a commodity circulation system, a company can use both internal services and attract outside organizations.

Channels of commodity circulation are an important part of the company's marketing policy. From what channels the company chooses for itself, depends the success of its products on the market, and, of course, the revenues of the company itself.

So, let's take a closer look at the essence and types of channels of commodity circulation.

The channels of commodity circulation are the ways in which the physical movement of the goods from the producer to the final consumer takes place. A final consumer of a commodity is a person who uses the goods to meet his own needs. On the other hand, the channels of commodity circulation are also ways and means of delivering goods to consumers. Also, by this term, we can mean the aggregate of individuals and legal entities that are intermediaries in the process of commodity circulation.

Depending on its complexity and structure, the channels of commodity circulation can be divided into 3 main types: direct, indirect and mixed.

In the case of the use of direct channels of commodity circulation, the goods directly come from the producer to the final consumer. In such a scheme, no intermediaries participate. That is, the chain of goods movement is as simple as possible and looks like this: the producer is the end user. When using the direct channel of goods circulation, all the functions for the movement of the goods and their sale are assumed by the manufacturer himself.

Direct channels of commodity circulation, as a rule, are used in the sale of such goods as complex technological equipment, or in the production of products or the provision of services under a specific order.

The next type of commodity circulation channels is more common - these are indirect channels. In this case, the manufacturer removes part of the functions for the delivery of goods to end users. The scheme of the movement of goods is complicated. It adds a new element - the middleman (and), that is, the chain is as follows: the producer - the intermediary (and) - the end user. As intermediaries are dealers, distributors, agents, retail intermediaries. The manufacturer, of course, loses direct connection with the consumer of its goods, but the use of such a channel gives an obvious advantage - the expansion of the sales market and the greater efficiency of sales. Thanks to their connections and the scope of their activities, wholesale and retail intermediaries ensure the wide availability of goods and bringing it to the target markets. The manufacturer, while losing some of its profits in favor of intermediaries, nevertheless remains in the win, as it saves its own resources and time. The market for the sale of its goods expands to such a level that it would not be available to the manufacturer if it operated on the market alone.

The last type of commodity circulation channels - mixed - combines elements of the first two channels.

An important condition for the efficiency of the work of the channels of commodity circulation used is the minimum costs of the seller and the timely delivery of the goods to the market. As a result, you can achieve good performance.