The strategic selection of distribution channels is an important factor in the success of the company. The channels you choose to use must all be focused on the best way to make the product available to your target market. You also need to be sure that you are getting value for money from any thrid parties that you are using to distribute your product.
To assess your profitability, you should review the effectiveness of your existing channels to market and assess what proportion of your business is sold via:
Terms for selling to major retailers often carry additional clauses that you must comply with in order for them to stock your product. These could include minimum orders and stock availability, specific delivery destinations, returns policies, invoice systems ( you will probably have to purchase and use their system) and packaging changes. So, you need to make sure that all of these additional costs are taken into account when deciding if it is a viable distribution channel.
Be aware of the legal definitions and responsbilities of distributors, agents and intermediaries. Also give any 'exclusive deals' careful consideration. Failure to understand these arrangements could be disastrous.
Managing conflict within your channels needs to be given early consideration. For example you will need to be very clear as to who 'owns' the end customer when a distributor and direct salesman are working the same geographical area? How do you handle national accounts where there are individual outlets in place too? If you are paying bonus commissions or rebates at different levels to different outlets then conflict may arise. The use of preferential discounted price lists for certain distributors etc. requires careful managing.