What is a sales channel?
A sales channel is the path through which a product or service is sold and delivered to customers. It’s the route connecting the seller to the buyer.
For example, a business might sell directly through its own website, app, or physical store, or indirectly through distributors, marketplaces, wholesalers, or retailers.
- Shorter sales channels (e.g., direct-to-consumer) involve fewer intermediaries. They can offer higher profit margins and lower prices for customers, but require the seller to manage tasks like marketing, logistics, and customer support.
- Longer sales channels include more intermediaries. These reduce per-sale profit but shift responsibilities such as distribution, promotion, and customer reach onto other businesses in the chain.
How do sales channels work?
A sales channel works by moving a product from its source – such as a factory or supplier – to the customer through one or more steps. Each step may involve different intermediaries, such as distributors, wholesalers, or retailers, who handle tasks like marketing, communication, transportation, and customer service. The goal is to make selling efficient and reliable.
Retailers often create a sales channel strategy to:
- Source products at a lower cost.
- Sell at a profitable price.
- Deliver products to customers quickly and reliably.
A business can use multiple sales channels simultaneously, such as selling custom products for different audiences through its own online store and third-party marketplaces.
Four types of sales channels
Businesses reach customers in different ways.
Retail
Retail is when a business sells products directly to the end customer – either in a physical store, online, or over the phone. Platforms like Shopify have expanded retail into a global opportunity.
Pros:
- Full control over the customer experience and sales process
- Direct insights into customer preferences and buying behavior
- Stronger customer relationships
- Higher profit margins than wholesale
- Ability to create and strengthen brand identity
Cons:
- Requires a large marketing budget and continuous adjustments
- Higher customer expectations compared to wholesale
- Risk of backlash if demand isn’t met
- Responsibility for all customer service
Wholesale
Wholesale is when a brand, reseller, or manufacturer sells products in bulk to retailers, who then sell them to end customers. Some wholesalers also produce the goods they sell, and some act as both wholesaler and retailer.
Pros:
- Expands brand awareness through multiple retailers
- Opportunity to offer dropshipping services
- Potential to scale quickly and expand internationally
Cons:
- Harder to maintain brand identity once products are sold through many outlets
- Requires significant upfront investment and storage facilities
Direct-to-consumer (DTC)
Direct-to-consumer (DTC or D2C) is when a brand or manufacturer sells directly to customers without relying on retailers or distributors. It has surged in popularity as brands noticed changing buyer behavior and the rise of eCommerce.
Popular among modern digital-first brands like Glossier, Warby Parker, and Allbirds, it has also been adopted by companies like Nike, Levi’s, and L’Oréal to strengthen direct relationships with customers.
Pros:
- Complete control over branding and customer experience
- Direct access to customer data and insights
- Higher profit margins per sale
Cons:
- Complex to manage the full customer journey (marketing, fulfillment, support)
- Rising customer acquisition costs and pressure to meet fast delivery expectations
- Risk of straining relationships with retail partners due to direct competition
Business-to-business (B2B)
B2B (Business-to-Business) is when one business sells products or services to another business. This can include businesses that use the products themselves (e.g., an office buying coffee machines) or businesses that resell them (e.g., a car dealership buying tires).
Unlike wholesale, which specifically refers to bulk sales to retailers or resellers, B2B is broader and covers all types of business-to-business transactions.
Examples:
- A tire manufacturer selling to a car dealership
- A coffee machine company selling to an office
- A print-on-demand company like Printify that sells to online merchants
Pros:
- Strong, long-term client relationships
- Higher profit per sale compared to retail or wholesale
- Ability to specialize and become an industry expert
Cons:
- Smaller, harder-to-reach market segments
- Longer and more complex sales cycles
How to choose a sales channel
Choosing the right sales channel depends on your business model, target audience, and resources.
Consider these factors:
- Customer reach
- Go where your customers are. For example, younger audiences may be best reached through online marketplaces or social media, while B2B buyers may prefer direct sales or distributors.
- Control vs Convenience
- Direct channels (your own website, app, or store) give you full control over branding, pricing, and customer experience but require more investment in marketing and fulfillment.
- Indirect channels (retailers, distributors, marketplaces) expand your reach quickly but reduce margins and control.
- Cost and margins
- Shorter channels usually bring higher profit per sale but higher operating costs.
- Longer channels share the workload (distribution, customer service, promotion) but cut into profits.
- Product type
- High-touch or customizable products (like print-on-demand or luxury goods) often work best through direct channels.
- Mass-market products may benefit from wholesalers, retailers, or marketplaces for scale.
- Growth strategy
- Start with one main channel, then diversify. Many successful brands use a multichannel approach (e.g., selling on their website, Amazon, and retail stores) to balance reach and resilience.
Conclusion
Sales channels keep a business running and growing. Each channel has its own pros and cons, depending on the role of different partners involved. The key is to choose a channel with smooth deliveries, ensure it aligns with your brand, and keep the customer at the center of every transaction.
FAQs
Selling through multiple channels can increase your reach, diversify your income streams, and reduce dependency on a single source of sales.
More sales channels mean more orders to track and stock to manage. Without proper systems, this can lead to confusion, out-of-stock situations, and unhappy customers.
Yes. Many eCommerce platforms and tools let you sync inventory, orders, and customer data across multiple channels from a single dashboard.