The Sephora lipstick you’ve just bought or the iPhone you have in your hand has come through various distribution channels. When we look at such a store we naturally assume it to be from manufacturers. But it is seldom true. It goes through channels like Primary, secondary, and tertiary sales.
Before we learn the types of distribution, let us divulge into fundamental aspects as to what a distribution channel is. A distribution channel is a series of intermediaries between the manufacturer and the final customer.
This string has a list of parties, from wholesalers to retailers. Distributors also act as intermediaries between wholesale and retail.
The ultimate goal for any intermediary is to reach out to as many customers as possible. As the supply trickles down to the end customer, demand will trickle up to the manufacturers. It is vital to understand the supply-demand chain as it directly affects the manufacturer and its manufacturing.
3 Types of Sales You Should Know
A Distribution channel has the following process of sales,
- Primary Sales
- Secondary Sales
- Tertiary Sales
All these above are equally important to the manufacturer. However, the intensity varies from company to company.
1. Primary Sales
The goods or products are dispatched from the manufacturer’s warehouse to the distributors’ warehouse. It is the preliminary action taken, right after the product’s production. The billing is done to the distributor who is the initial sale point.
To learn how much to produce, the manufacturer needs to know what his position is in the market. How much does he need to supply to meet the demand? What is his audience’s demand-supply pattern? Once he knows these concepts, he will be able to create a balance accordingly. The competition here is comparatively lesser as wholesale industries have fewer investors due to its fluctuance nature.
2. Secondary Sales
This stage matters the most to the manufacturer as the goods are sold to the retailers. The more goods retailers purchase, the more profit the company makes. The distributors then charge their margin and sell it to the retailers.
The success of a product sale depends on the intensity of the retailer’s interest in selling the products. Here the manufacturer’s involvement is much lesser compared to the distributors. But, the profits earned directly affect them. When the secondary sale increases, the primary sale will also increase resulting in raising the production quantity.
3. Tertiary Sales
This is the last stage of the sales channel. Here the retailers finally sell it to the end-users a.k.a consumers. The retail industry is more profitable than the secondary industry as the sales are directly made to the customers as per their demands. So, retailers don’t have to worry about making bulk purchases as long as there is demand.
Retailers sell at Maximum Retail Price (MRP) which is the highest price of the product in the market. Tertiary sales are visible only when there is a 3-tier supply chain such as Primary Sales > Secondary Sales > Tertiary Sales. Sometimes the second tier is removed in certain supply chains & the distributor himself sells the products to the direct customers.
Regardless of the type of tier, when a newbie wants to enter the sector or the existing ones wish to expand, they need to build a relationship with different companies from diversified industries. Sometimes, the good old who’s who technique helps in gaining contacts. But, now in modern times, there is a much more efficient way of getting contacts.
There are tools available on the internet that helps you to find emails belonging to multiple companies. GetEmail.io is an exceptional tool that can assist you in getting the email addresses of anyone around the world. With its database-powered AI, it can save tons of your time and come up with the results in just a matter of seconds.
GetEmail.io also comes with a chrome extension to Linkedin wherein you can access the professional email addresses of the people you are connected to. Utilizing this tool can be really helpful in increasing your sales funnel.