Direct Distribution vs Using Intermediaries
Learn how direct distribution differs from using intermediaries, with a clear A Level Business example and the key trade-offs to explain in an exam answer.
Direct distribution means a business sells its product straight to the final customer. Using intermediaries means it sells through another business, such as a retailer or wholesaler, that helps the product reach the customer. The key difference is who sits between the producer and the customer in the sales channel.
How the routes work
A bakery taking orders on its own website and selling directly to customers uses direct distribution. If the bakery supplies a supermarket that then sells its products to customers, the supermarket is an intermediary. A wholesaler may also sit in the channel, buying products in bulk and supplying retailers. An agent can help arrange sales without necessarily buying the product.
Why choose one over the other?
Direct distribution gives a business more control over pricing, customer service and how its product is presented. It can also keep the share of the selling price that would otherwise go to an intermediary. However, the business must handle more of the selling process itself, which may require investment in a website, staff or delivery arrangements.
Intermediaries can give a business access to more customers, established shops and specialist knowledge. This may be useful when the business cannot easily reach customers on its own. In return, it may have less control over how its product is sold and receive a smaller share of the final selling price.
Exam mistake to avoid: Do not say that direct distribution always costs less or that intermediaries always increase sales. Compare the likely benefits and costs for the particular business in the question. A business can also use both routes, for example selling through its own website and through retailers.
