Direct and indirect sales are the two types considered under the sales classification from the manufacturer's point of view. Here is a brief bibliographic review:
Direct selling is the process by which the company responsible for the promotion sells to the user, the ultimate consumer or retailer without the intervention of intermediaries.
Direct sale: consists of getting the product to the consumer through their own sellers or commercial agents. The vendors themselves belong to the workforce of the company; commercial agents act individually and sell on behalf of the manufacturer, without belonging to its staff, in exchange for a commission based on sales made. Direct selling or direct marketing is used for door-to-door, mail-order, Internet, television, and manufacturer-owned stores. For example, sale of insurance, cosmetic products (Avon) or for the home (Tupperware), books (Circle of Readers), etc. (Squire)
The Direct Salesis a channel for the distribution and marketing of products and services directly to consumers. From this definition we can deduce the following: 1. It is a face-to-face buying and selling process: generally in the client's homes, at the seller's or distributor's home, but also in other places such as: the client's workplace, a cafeteria, premises provided for the occasion. hotels, salons, and any others, always excluding permanent retail locations. 2. This process is usually done using an "explanation or demonstration" from an independent vendor. Sellers are commonly known, depending on the company, as direct sellers, distributors, representatives, dealers, beauty consultants,counselors… (Ongallo) The above definition is also considered for the termpersonal selling.
Indirect sale is the process by which the company responsible for production sells to the user through second or third parties that are constituted as distribution channels. (UFG)
Indirect sale: consists of delivering the product to the final consumer through one or more intermediaries, who buy the product and resell it at a higher price. There are two types of intermediaries: retailers (they buy the product from the manufacturer or wholesaler and resell it to the consumer) and wholesalers (they buy the product from the manufacturer and sell it to the retailer who will later resell it to the final consumer). (Squire)
In indirect sales (through channels) the sales action consists of the preparation, prospecting and support of the channel, the sales action is outsourced and the generation of demand may or may not be outsourced. (Pineiro)
The following figure (Escudero) clearly presents the two concepts: Level 0 corresponds to direct sales, in which the products reach the consumer directly from the manufacturer. Levels 1, 2 and 3 show the possibilities of the indirect sales process, in which third parties or intermediaries (importers, wholesalers, retailers) intervene to get the product from the manufacturer to the consumer.
Source: Escudero
The systems and distribution policies arise in order to satisfy a very specific objective: to get products from the manufacturer to the consumer through intermediaries, choosing the most appropriate channel and means or pathways capable of providing the best service at the lowest cost possible. More or less complex distribution systems can be established between the producer and the consumers, in which a greater or lesser number of intermediaries may intervene. As a general consideration (see the diagram of the distribution function), if the manufacturer chooses to sell its product to channel A, it will reduce its commercial costs. even if "the price you pay for it" is a small sales margin. However, to the extent that the same manufacturer assumes distribution tasks, it will increase its sales margins, taking into account that its commercial costs will also be higher. Whichever option is chosen, the manufacturer must bear in mind the following maxim: to the extent that it assumes tasks of commercial distribution (that is,as the product moves down the channel in the direction of the arrow in the graph) it increases its trading costs and the profit margin that it will be able to obtain from its products, but requires a more powerful administrative and commercial organization. (Sainz de Vicuña)
Scheme of the distribution function. Source: Sainz de Vicuña
References
- Escudero Serrano, Ma. José, Administrative operations of sale. Editorial Paraninfo, 2010, p. 18, 19 Ongallo Chaclón, Carlos. What is direct selling. Ediciones Díaz de Santos, 2013. p.8.Piñeiro, Gabriel. The sales process Sainz de Vicuña Ancín, José María. Commercial distribution: strategic options. ESIC Editorial, 2001, p.30UFG, Francisco Gavidia University. General aspects of the product.
