Direct and Indirect Channels

Have a look at the following Case Study:

Elliot and Phillip both sell to large businesses.  Elliot sells printing equipment and Phillip does training on legal compliance.  Elliot’s business is not doing very well lately.  During a coffee conversation Elliot told Phillip that seeing as they both sell to large corporates Phillip should consider also selling some of his printing equipment.

What are your thoughts about Elliot’s idea to have Phillip sell his product for him?  

Many Entrepreneurs want to sell through someone else. They believe it will be easier to do so. Unfortunately they soon realize that the other person does not necessarily have the same interests as the entrepreneur. Selling your services through another company is called an indirect sales channel.

Consider for a moment that you are an entrepreneur that has written a book and you now want to sell your book as a product.  This might be a cook book or some other book on maintenance methods for hard rock drilling machines. You might want to sell and distribute this book over the internet.

There are a few options open to you.  You could open your own website and get customers to buy directly from your website.  In order to do this you might need to create a lot of advertising for people to come to your website or develop SEO on the selected keywords that would describe your product.  Having your own website would be considered direct selling.  You are not dependant on anyone else for sales and there will be no middleman between yourself and the customer.

You might however consider an alternative and decide to sell through Amazon or another third party book sales and distribution site.  This is an example of indirect selling.  Many well-known authors have decided to make use of publishers or online retail stores such as Amazon to sell their books. However, while they were writing and designing their books they made use of editors and a select reader audience to test and read their book and provide them with feedback on the book.  An indirect sales channel is normally more effective once your product is known to your audience.

A sales company could also sell your offering for you.  You must, however, make sure that you are not just a number on a list they are selling, but that they will have a significant reason to promote and sell your product over and above the other products that they offer.