Without strong distribution channels, even the best products can fail.

Take Google Glass, for example. Despite being a groundbreaking product (designed for augmented reality apps) from Google, it failed in 2014, largely due to a poor distribution strategy. The invite-only system, unclear target market, and lack of retail presence resulted in the product not reaching the right customers.

That’s why choosing the right distribution channels is critical. They bridge the gap between your product and your customers. 

In this blog, we’ll break down distribution channels, explore their types with real-life examples, and show you how to create a distribution strategy that ensures your product reaches the right audience at the right time.

What Are Distribution Channels?

Distribution channels are the routes through which products and services flow from producers to end-users. They are a network of intermediaries, businesses, processes, and touchpoints that help you move products from the point of production to the point of consumption. These channels serve as a link between manufacturers and customers, ensuring products reach the right place, at the right time.    

Types of Distribution Channels

Based on channel length

Direct distribution channel

Also known as zero-level or direct channel, direct distribution means businesses selling straight to consumers without intermediaries.

Example: SaaS tools like Notion, RazorPay, or Distribution AI sell subscriptions directly through their websites. Similarly, Netflix or Instagram shops are direct channels where the businesses offer products/services directly to consumers without any intermediaries.

Indirect distribution channel

Indirect distribution channels involve one or multiple intermediaries, such as retailers, resellers, or platforms, between the producer and consumer.

Example: Consumer brands like Samsung or Puma use indirect distribution methods like selling products via Amazon and Best Buy.

The image below shows the one, two, and three-level channels of indirect distribution, along with examples.

Hybrid distribution channel

Using the hybrid distribution channels, companies employ a combination of direct and indirect distribution channels to reach maximum customers and cater to diverse customer preferences.

Example: Fashion & lifestyle brands use multiple distribution channels. They sell products through their own websites, Amazon, and even retail stores. Similarly, HubSpot, Zoom, and Microsoft 365 sell subscription services directly through their websites, affiliates, certified agencies, consultants, and resellers.

Based on ownership & control

Conventional distribution channels

In this channel, each entity (manufacturer, distributor, retailer) works independently at different levels.

Example: Local farmers selling produce through markets managed by third-party vendors. Also, traditional publishing involves independent distributors, publishers, and bookstores.

Vertical distribution channels

Also known as vertical marketing systems, this distribution channel involves multiple levels controlled by one entity. Here, the channel members or intermediaries work together.

Example: Starbucks owns the entire distribution chain—from coffee sourcing to retail outlets. The system is vertically integrated, ensuring control over both manufacturing and sales through its own retail stores.   

Horizontal distribution channels

The horizontal marketing system involves two or more firms at the same level of the supply chain partnering for wider distribution.

Example: Banks partnering to share ATM networks or Coca-Cola and McDonald’s collaborating for wider distribution. Similarly, in SaaS, the integration of Slack and Salesforce provides customers with a CRM ecosystem that offers seamless communication, a classic example of horizontal distribution.

Why Distribution Channels Matter in Business?

With 81% of customers preferring personalized experiences and 40% of the US consumers prioritizing faster delivery, businesses are choosing and managing their distribution networks effectively.

Here are more reasons why distribution channels matter:

Wider market reach and customer access

For enterprises with diverse customer segments, effective distribution is essential for expanding their market reach. Brands like Walmart, Coca-Cola, and Starbucks employ a hybrid distribution approach. All of these brands enable third-party sellers, including marketplaces, offline and online retailers, and delivery apps, to reach a broader customer base.

For instance, Starbucks sells coffee via its own outlets and Uber Eats. Similarly, Coca-Cola has extensive market access through departmental stores, fast food chains, and other channels.

Cost reduction and higher efficiency

Indirect channels, such as wholesalers or partners, help share costs and logistics burdens. They not only increase visibility but also bring marketing and delivery cost efficiencies.

For example, Amazon heavily invests in its distribution infrastructure. From warehouses to fulfillment centers to delivery fleets, Amazon’s vertical distribution system allows for cost-cutting while maintaining pricing and delivery speed.

Improved customer experience

When you have the right distribution channels, customers can access your products/services conveniently. It streamlines delivery and ensures timely product delivery. Optimized distribution strategies build customer trust, foster loyalty, and strengthen relationships.

Business Distribution Channels Examples Across Industries

Retail distribution: Nike 

The retail giant Nike uses a multi-channel distribution strategy that combines both direct and indirect channels. It sells directly to customers via Nike.com and its branded retail stores, while also partnering with large retailers like Foot Locker, JD Sports, and Amazon.com to reach a wider audience. This hybrid approach allows Nike to maintain strong brand control through its own outlets while leveraging retail partners to expand into global markets.

SaaS distribution: Slack

Slack, a SaaS communication platform, relies on digital distribution channels, with its core acquisition channel being its website and self-serve freemium model. Users can sign up, onboard, and scale without any sales intervention.

Beyond that, Slack integrates into app marketplaces (like Salesforce AppExchange) and leverages reseller and partner programs for enterprise adoption. Slack also integrates with the AWS Support app and Chatbot to enable users to access AWS resources directly within Slack. This multi-channel strategy helped Slack expand to over 42 million daily active users as of 2025.

Media distribution: Disney+

This streaming service uses a hybrid distribution strategy. On one hand, it runs a direct-to-consumer streaming platform, allowing it to reach audiences globally without intermediaries. On the other hand, Disney still leverages partnerships with cable operators, telecom providers, and bundles (like Disney+, Hulu, and ESPN+) to expand distribution.

Using this distribution strategy, Disney+ has gained over 126 million subscribers globally as of 2025.

Bonus: Social creators’ distribution channels

Unlike traditional companies, creators’ distribution strategy is platform-dependent. Hence, individual creators distribute products/ content primarily through social media channels such as TikTok, YouTube, Instagram, and LinkedIn.

Let’s take the example of a creator who produces content around social media management tools. Their distribution channels can include,

• YouTube for in-depth video reviews,
•  TikTok for quick tips and teasers, and
• Substack for a detailed newsletter that discusses strategies, plans,  social media automation, etc.

In this case, the creator offers two core services to their audience: video content for social media marketing and newsletters. This distribution mix focuses on building visibility across multiple platforms while generating diverse income streams, including ads, sponsorships, and memberships.

Pro Tip: Tools like Distribution AI help solo creators distribute their content effectively. It helps repurpose content assets for various social platforms (captions, carousels, text, and images) and also enables tracking content performance

How to Create a Distribution Channel Strategy?

According to 91% of companies, distribution strategy impacts the overall company performance. Hence, it is one of the most crucial factors that should be considered for enhanced customer experience and better revenue.

Here’s how you can build your distribution strategy:

1. Identify your target audience: Understand where your target customers are, how they prefer to buy, and what influences their purchase journey. For example, a SaaS company may focus on digital-first buyers who prefer self-service signups vs. enterprise buyers who prefer resellers.
2. Set clear goals: Decide your goals aligned with your business strategy—wider reach, faster delivery, higher margins, or stronger brand control.
3. Choose your type of distribution channels: Select your different distribution channels depending on your business model. Decide whether you want to sell directly or via intermediaries. You can also opt for hybrid channels if you’ve enough resources to support the operations.
4. Decide your distribution intensity: Be clear about how you want to distribute your products so they reach the right audience. Select the right distribution method based on your business type, size, and resources.

For example, if you want to penetrate the market with maximum product availability, like Coca-Cola, go for intensive distribution. You can also choose between selective distribution and exclusive distribution, if you want a smaller set of distributors (like Apple) or only a few distributors (like Rolex and other luxury brands).

5. Build strong partner relationships: If you choose indirect and hybrid channels, provide training, support, and adequate incentives to channel partners.
6. Track, optimize, and adapt: Monitor sales per distribution channel, partner ROI, and customer satisfaction score. Retain what works, improve, and eliminate what doesn’t yield results.

💡Pro Tip: If your distribution channels include social media platforms, Distribution AI’s social media analytics can help you track content performance, conversion rates, and other key engagement metrics. Sign up for free!

Once you’ve mapped your distribution strategy, select the right distribution channel for your product. Read on to know how.

How to Choose the Right Distribution Channel?

Here’s a process for evaluating and selecting the best distribution channels.

Learn from competitors

Start by mapping how others in your industry distribute. Benchmarking helps you select distribution channels that are effective and identify areas for improvement.

For example, Warby Parker, an eyewear company, began as an online-only brand that directly sold from its own online store. Gradually, they expanded to physical stores, longer distribution channels, and adopted a vertical distribution system. 

The brand expanded its distribution, benchmarking other brands like EssilorLuxottica. This helped Warby Parker spot effective distribution strategies and opportunities to differentiate.

Validate with customer data

Evaluate channels using customer data. Ask:

• Which channels bring the highest-quality customers?
• Where are drop-offs happening?
• Which platforms do customers trust?

Use your sales team’s feedback, customer interactions, customer behavior data, and sales volume to understand a channel’s conversion rates and identify areas to improve in the distribution process.

Assess costs and returns

Consider channel costs—fees, manpower, commissions, training costs, etc. Then, identify the channels that’ll bring you maximum returns.

For instance, Indie beauty brands often choose to sell through Sephora despite the high margin cut. That’s because Sephora has a strong brand visibility and customers’ trust that outweigh the costs. On the contrary, many micro-SaaS tools prefer direct sales on Product Hunt or AppSumo to keep margins intact.

Align with daily operations

Your distribution strategy should align with your team’s capacity. If you have a lean team, managing multiple resellers may be difficult.

For example, Shopify online store owners may consider using Amazon FBA for logistics, but the complexity involved in handling returns, reviews, and policies requires streamlined operations and resources that small businesses often lack.  

Assess market reach and partner potential

If you consider intermediaries (distributors, resellers, marketplaces), evaluate their reach, performance, and reputation.

• How many customers can they put you in front of?
• Do they enhance or dilute your brand?
• Do they have a proven sales record?

Choose distributors with wider visibility and whom your customers trust.

Check logistics early

When selecting distribution channels, check the logistics first—warehousing, returns handling, fulfilment speed, and scalability to meet customer demand. 

In a Masters of Scale episode, Airbnb CEO Brian Chesky shared how scaling without reliable host operations almost led to the brand’s downfall.

They emphasized that their distribution model was heavily dependent on a robust host support and logistics system at every touchpoint. Hence, not having sufficient resources and clear processes can lead to system breakdown and reputational damage.

Map location to customer needs

Make sure your products reach where your customers are, but only when you can handle multiple locations. Distributing in various regions without proper logistics, warehouses, and distribution networks can result in negative customer experiences.

For example, Slack initially targeted Silicon Valley teams as its core user base. However, the brand scaled globally after ensuring servers and support could handle new regions.

Keep iterating

Selecting distribution channels isn’t a one-time decision. Once you have shortlisted channels and implemented your strategy, ensure regular assessments. Keep the distribution processes in check, conduct customer satisfaction surveys, and measure KPIs like ROI, gross margin, on-time delivery, order accuracy, and more.  

Best Practices for Effective Distribution

Here are five actionable best practices for effective distribution:

• Match your distribution channels to the customer journey: Use channels for visibility where customers first encounter you, such as social media platforms. Next, direct them to more information like your website, marketplace comparison, and blog. Then guide them toward purchasing through Amazon, a retail store, or Shopify.
• Test micro-channels before scaling: Experiment with smaller channels, such as LinkedIn/ WhatsApp groups or niche online channels, and pop-up shops, before scaling. This way, you can validate demand without investing many resources.
• Create channel-specific offers or experiences: Incentivize customers differently across distribution channels. For instance, loyalty points on the app, community events, and free goodies for an enhanced in-store experience.
•  Invest in partner enablement: If you’ve resellers and distributors, equip and train them for seamless service. Consider distribution partners as an extension of your team and offer them content kits, training programs, and other resources to support better performance.  
• Balance automation with personalization: Leverage automation to streamline distribution, but ensure that services are personalized for stronger customer relationships. For example, automate free resource offerings (eBook, webinars) via email drip campaigns but leverage sales teams and partner agencies to sell high-value products.

Final Thoughts

The right distribution channels shape customer experience, market reach, and long-term growth. Whether you choose direct, indirect, or hybrid distribution channels, the goal is always to make it easy for end consumers to find, engage, and transact with your brand.

With markets going digital, businesses need to choose digital distribution channels to increase visibility and gain customer trust. Tools like Distribution AI can help you automate content creation for social media networks, track their performance, and improve distribution strategies effectively to meet customer demands. 

Want to know more about Distribution AI?