Channel Sales: The Daily Definition

 In Business Intelligence, The Daily Definition

What is channel sales?

Channel sales

Channel sales refer to when a third party steps in to sell your product for you. This selling strategy frequently exists alongside other sales channels, such as direct sales and ecommerce.

Channel sales are the polar opposite of direct sales, where you have an in-house team that sells directly to clients, either online or through your own location. It requires an outside group of re-sellers, distributors, and value-added providers to have knowledge of your product in order to sell it to their own customer bases.

An example:

Most of the sales made on Amazon.com can be classified as channel sales. If Amazon didn’t make the product, they’re simply acting as a re-seller. If you decide not to buy your next computer from Amazon and purchase it directly from the manufacturer instead, you are participating in direct sales.

Our two cents:

When compared with direct sales, channel sales offers some clear benefits:

  • Lower Costs
    Channel sales requires much less overhead because it doesn’t rely on an in-house sales team.
  • Efficient
    In the channel model, one channel manager can take the place of five or six salespeople.
  • Highly Scalable
    Once you have an established partner program, it’s easy to bring new partners up to speed.
  • Established Trust
    When going with the channel route, you take advantage of the trust that your partner has already established with potential customers.
  • Low Risk
    You can try new products, packages, promotions, and campaigns with a partner without risking as much as you would if you were to try it in your direct sales.

Don’t confuse channel sales with omnichannel sales. While the focus of channel sales is having others sell your product, omnichannel sales refers to sales that take place across several channels within your company.

Using a partner channel as an extension of your sales team is a fantastic way to increase your sales output, but make sure you stay on top of your re-sellers. Because they aren’t a part of your in-house team, they may have different standards for who best fits your product, which can lead to confusion. Keeping a close eye on this channel will yield the most productive results for your company.

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