What is the retail channel?
The retail channel is a term used to refer to the sales processes used by distributors, manufacturers, and retail chains. In business terms, the retail channel refers to the sales of a product or service from the manufacturer directly to the merchant. In recent years, however, the retail channel has come under increasing pressure from increased consumer demands for more value for their dollar. Increasingly, consumers are shopping for products not only on the strength of the manufacturer’s promise of excellent quality but also because the retail channel is often the least expensive way to purchase a product.
The retail channel’s origin comes from the very beginnings of the retail industry.
The earliest retail outlets sold the commodities produced by the manufacturers that supplied their raw materials. While some analysts believe this was a means of circumventing the higher cost production associated with the development of modern industry, others note that it reduced distribution costs for manufacturers while increasing the wealth of merchants with a wider distribution network.
Developments in retail distribution have resulted in significant changes in the type of goods distributed.
For example, rather than being limited to selling items in stores, many stores began selling consumer goods over the telephone. Although originating from the same place, these efforts differ from the widespread use of the wholesale and direct marketing channels. Developments in retail over the last thirty years have led to the establishment of more outlet locations and the ability to sell a broad range of products through various communication methods. These developments have made the retail industry substantially more volatile and competitive.
As retail sales growth and development have improved, so has the dialogue among channel partners.
Many companies are now working more closely with wholesalers and suppliers to improve distribution efficiency and cost-effectiveness, while others are focusing on new revenue opportunities arising from the changing face of the retail market. The evolution of the retail sector has led to the concentration of resources on several core areas. Among these key areas are:
Direct selling channels represent the bulk of sales within a company’s retail system.
These channels include manufacturers, dropshippers, independent agents, pre-packaged items, and private labeling agents. A manufacturer often works with a direct selling company, a dropshipper provides products to be sold by a distributor, and an agent represents the customer between the manufacturer and the customer. In order to remain competitive, most retail outlets today require all of their distribution channels to be highly flexible in their clientele.
Drop shipping is a retailing technique that allows a company to sell its products without having actual storage or receiving materials.
It has exploded in popularity in recent years because it allows companies to sidestep some of the expensive storage costs of carrying inventory. The product is then stored in a warehouse until it is purchased by an end-user. A number of manufacturers and suppliers work with dropshipping companies in this way to provide the channel with products at the best price point.
Private label rights are a type of licensing that gives retailers the right to brand a product under their own name.
This can be extremely lucrative for savvy entrepreneurs who can license popular products with minor changes to make it their own. Once the product is sold, they keep the profits and can work on improving the product further themselves. Private label rights also let retailers take full control of the packaging and labelling of the product, giving them control over their own niche market. Private label rights typically come with a small fee, but can make a huge difference for a struggling retailer that can’t afford traditional retail sales.
While retail sales are a large portion of overall revenue for most companies, they represent only around 25% of revenue generated from the company’s retail outlets. This means that there is an incredible opportunity for savvy entrepreneurs to enter the retail channel. If you’re considering becoming involved in the retail industry, you may want to consider taking some training courses in order to learn more about retail sales.
You can also find training programs on the internet that can help you learn about retail sales. Whether you are interested in starting your own business or getting training for the next level in retail, you can find the perfect program for you online or in a physical brick-and-mortar school.