Leveraging Benefits of Indirect Sales Channels

Sometimes the indirect approach is the best approach. Leveraging the benefits of indirect sales channels can be confusing if you have never explored indirect sales channels before. The idea might even make you uneasy. After all, by taking advantage of indirect sales, you will be giving up some control over your product to a third-party partner. But ultimately, leveraging the benefits of indirect sales channels and indirect marketing will leave your business better off.

indirect marketing examples

Benefits of Indirect Sales Channels

A direct sales channel means that you are the one selling your products to the customer. When you sell to a third party instead of to the customer directly, you are utilizing an indirect sales channel. It is important to note that these third-party sellers do not work for you. Instead, you form a partnership to try leveraging the benefits of indirect sales channels. Here are some ways that your business can benefit from indirect sales channels.

The Customer Benefits

If you are a small business just starting, few people will likely have heard of your brand. Partnering with a popular retail store can help you get your name out there and build brand recognition. 

It can also help you gain customer trust. If customers trust the retailer you have partnered with, they will trust that they chose to stock a good product. Building and keeping trust is difficult. By partnering with a credible indirect seller, you can leverage the existing trust to establish your credibility.

The Cost Benefits

Another benefit of indirect sales channels is their cost-cutting opportunities. The indirect sales channels you choose to partner with will have their sales and marketing resources. They will also have their own logistics in place that you can take advantage of.

Teamwork is known to make processes more efficient. Shipping and storage costs can be split. You and the third party can share the costs associated with your product so neither of you bears the full cost.  

Be aware that depending on the partnership, you might need to share revenue as well. The cost-cutting benefit might still outweigh this fact, but be sure to choose the indirect sales channels that will give your business the most benefits with the fewest drawbacks.

Speed to Market and Experimentation Benefits

Another benefit of indirect sales channels is that you can enter markets faster and easier than you could on your own. You can introduce a new product, expand geographically, or test a product or expansion plan. Combined with the cost-saving benefits of indirect sales channels, you can experiment without as much risk. You would be 100% responsible if you used a direct sales channel, but with indirect sales channels, you can go to market quickly and see what works and what does not just as fast.

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Drawbacks

While there are numerous benefits at your disposal when using indirect sales channels, it is vital that you also consider the drawbacks before you make a decision. 

Loss of Control

Once you give your third-party partner your product you give up some control over what they do with it. For example, you can partner with a popular retailer. Most of the time you will not decide where they choose to display your product or how much marketing they choose to give it. This is especially true for new businesses without a lot of money and power. You also risk miscommunication. The goals and vision you have for your product might not match the impression the indirect sales channel gets. This is why it is vital that you thoroughly research and explore different partners to find the one that will work best for your business and help you reach your goals.

Slow Feedback

The presence of a third party between you and the end customer can hinder your access to customer feedback. If you do not have proper lines of communication, you could miss out on important customer feedback. Understanding and responding to customer needs can be the difference between a successful and a failed business. If you choose to go the route of indirect sales, you will need to take the extra step to create clear and easy means of constant communication.

Competition

While there are many benefits to indirect sales channels, that will not matter if you can not find a good partner amidst all the competition. Top sales channels might not want to partner with you just because they do not have to. They have a lot of great businesses all vying for a spot with them. You will need to find a way to stand out if you want to partner with them. 

indirect channel of distribution

Indirect Marketing Examples

Now that you have chosen to leverage the benefits of indirect sales channels, you are going to need to market your products yourself. After all, you can not rely on your partner to do all the marketing work. Indirect marketing pairs well with businesses that choose to use indirect sales channels. 

People grow weary of direct marketing activities. They do not want to feel like you are always trying to sell them something. To combat this, you can employ indirect marketing. Below you will find indirect marketing examples.

Content Marketing

Content marketing is meant to solve your customer’s problems through creative and engaging content. Blogs, videos, podcasts, images, and infographics are examples of content you can employ in your marketing strategy. Consistently upload new content to keep your customers coming back and your business at the forefront of their minds. Content marketing is an opportunity to establish yourself as an expert in your field. The more customers trust your business, the more likely they are to trust your products.

Social Media Marketing

Another indirect marketing example is social media marketing. Social media is a great way to stay connected with your customers. While you might not be directly selling to your customers anymore, it is still important to get their feedback. Social media can help mitigate the communication issues associated with indirect sales channels while also giving you a platform to market your products. 

Choosing the right social media platforms and what content to post on each platform will take some research. When you find the right ones, you can make your business more approachable and build credibility in your industry.

Search Engine Optimization

Search engine optimization, or SEO, is the process of improving your online presence in a way that pushes your sites to the top of search engine results. SEO will also help you create successful content and social media marketing campaigns.  It helps increase brand awareness and ultimately leads to more sales. The better your SEO, the more likely you are to rank highly on the search results page, the more likely people looking for products like yours are to click on the link to your page, the more likely they are to buy your product.

Indirect sales channel

Indirect Channel of Distribution

There are many indirect channels to choose from. Choosing the right indirect channels of distribution will give you the most benefits to leverage towards reaching your business goals. 

Retailers

An example of an indirect channel of distribution is retailers. If you sell your products to a retailer such as a grocery store or clothing store, you are using a retailer. The retailer then sells your product for a profit. Generally, retailers only sell a small number of products at a time, so they only buy so many products at a time. 

Wholesalers

Another example of an indirect channel of distribution is wholesalers. Wholesalers buy products in bulk and then sell them to multiple retailers. The more the realtor buys from the wholesaler, the less they have to pay per product. If you choose to use a wholesaler, you will have two intermediaries between you and the end consumer. While wholesalers can help distribute your product to multiple retailers at a time in different geographic locations, the more steps between you and the end-user, the harder it will be to communicate with the end-user.

Franchising

You can lease your trademark to other people. They pay you for the use of your brand name. The benefits of this form of indirect sales include that the person in charge of a particular part of the franchise knows how to sell to the people in their community best. It helps foster community relationships that would not be possible otherwise. As the brand name owner, you will have to give up some control. Franchising works best with popular brands and is common among restaurants. McDonald’s and Subway are examples of franchises.

System Integrators

System integrators are most commonly found in business-to-business purchases. They consult with a business and help them find product solutions to their problems to create an integrated system. They can suggest your product to a business, indirectly selling the product to them.

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Choose Your Indirect Sales Channels

By leveraging the benefits of indirect sales, you can expand your business, cut costs, and get customers to try your products. Weigh the pros and cons of every indirect sales channel you choose to use to find the one that offers you the most benefits and will help you reach your goals. You might find that a certain direct sales channel is better for you. Create efficient communication channels to stay connected with customers as you are not directly selling to them. Their opinions are essential to your business’s success. Employ indirect marketing techniques to connect with your customers and establish your credibility in your field. If you take the time to do these things, your indirect sales channels will run smoother.

FAQ:

  • What are indirect sales channels?
  • What are the disadvantages of indirect sales channels?
  • How do I choose an indirect sales channel?
  • What are the advantages of indirect marketing?
  • What is a direct sales channel?

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