Choosing a Channel of Distribution (Factors) A business might consider the following factors when choosing a channel of distribution:
1. Profit margin The more middlemen involved, such as a wholesaler or retailer, the less the business earns per item sold. Selling direct to the customer keeps the profit margin higher.
2. Type of good
Perishable goods, such as fresh bread from a bakery, are sold directly to local shops to reach customers before they spoil. Mass-produced goods with a longer shelf-life, such as Tayto crisps, can be sold more easily through a wholesaler as they don’t spoil quickly.
3. Market size
A business that sells small volumes, such as a craft jewellery maker, can sell directly to its customers. A business that sells large volumes, such as Cadbury, would use wholesalers and retailers to reach a national or global market.
4. Online presence
A business with a strong following on Instagram, TikTok or its own website can sell directly to customers online. This cuts out the need for a retailer and the business keeps more of the profit. 5. Technology
New platforms and marketplace apps let a business reach customers it could not reach on its own. A craft jewellery maker can list its products on Etsy to sell to customers around the world, and a local restaurant can take orders through Just Eat without hiring its own delivery drivers.