Channel Arrangements

The distribution channel consists of many parties each seeking to meet their own business objectives. Clearly for the channel to work well, relationships between channel members must be strong with each member understanding and trusting others on whom they depend for product distribution to flow smoothly.

For instance, a small sporting goods retailer that purchases products from a wholesaler trusts the wholesaler to deliver required items on-time in order to meet customer demand, while the wholesaler counts on the retailer to place regular orders and to make on-time payments.

Relationships in a channel are in large part a function of the arrangement that occurs between the members. These arrangements can be divided in two main categories:

  1. Independent Channel Arrangements
  2. Dependent Channel Arrangement
Costs of Utilizing Channel Members
Channel Arrangements: Independent