Subject areaChannels and tools
Also known asdistribution channel
A distribution chain is the route a product takes from the manufacturing company to the end customer, through the intermediaries who buy, store and resell it: usually the wholesaler (who buys in bulk and resells to other businesses), the distributor and the retailer.
Each step adds a service and keeps part of the margin, so the length of the chain affects both the final price and the control the company retains over its brand.
This is where the two classic strategies come from: a push strategy drives the product down the chain with incentives for intermediaries, while a pull strategy creates demand among end customers, who then ask retailers for it. In the European Union, relations between the levels of the chain fall under Regulation (EU) 2022/720 on vertical agreements, which for example prohibits imposing a minimum resale price on the retailer.
Source: Regolamento (UE) 2022/720 della Commissione sugli accordi verticali.
An example
The case below is constructed, because the term does not yet appear in the articles. A chemical company sells solvents to a specialist distributor, which delivers them to workshops in its area. When it opens a direct sales portal for its largest customers, it has to agree with the distributor who serves whom, so that the two channels do not compete for the same orders.
Related entries
broader entriesthis entry and narrowertwo levels down← up · → down
Enrico Giubertoni. Licensed under CC BY-NC 4.0: you may quote, translate and adapt this entry with the author’s name and a link, stating any changes. For commercial use, write to info@enricogiubertoni.com
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