What is an indirect channel?
The term “indirect channel” refers to a business strategy where a company sells its products or services not directly to customers, but through third-party entities such as distributors, resellers, or other partners. These partners can market, sell, and even service the products on behalf of the original provider.
Indirect channels provide access to a wider market and customer base, allowing companies to tap into new geographic areas and market segments more efficiently. Moreover, working with partners can reduce the costs and complexities of direct selling, as your partners can handle distribution, inventory management, implementation, and customer support.
This shift towards cooperative partnerships is here to stay. A McKinsey article forecasts that: “By 2030, ecosystems will play a major role in almost every aspect of global economy, driving around $80 trillion in annual revenue—a third of total global revenue.”
There are many different types of indirect channels that can help you successfully find your customers. It will depend on your industry, company size, location, and more. However, the most common types of indirect channel partners include:
- Distributors: Independent entities that purchase products from manufacturers and resell them to retailers or end customers
- Wholesalers: Companies that buy products in bulk from manufacturers and sell them to retailers or other businesses at a discounted price
- Retailers: Businesses that directly sell products to end customers through physical stores, e-commerce platforms, or both
- Value-added resellers (VARs): Companies that enhance or modify products or services before selling them to end customers, often bundling them with additional services or features
- Agents: Individuals or firms that act as intermediaries between manufacturers and customers, earning commissions on sales
- Systems integrators: Entities that design and implement complex solutions using various products and services from multiple vendors
- Consultants: Professionals or firms that offer expert advice and guidance on product selection and implementation to businesses
- Independent software vendors (ISVs): Companies that develop and sell software products that complement or integrate with other software platforms
- Solution providers: Organizations that offer comprehensive solutions combining products, services, and expertise to address specific customer needs
- Managed service providers (MSPs): Companies that deliver IT services and solutions to businesses, often on a subscription basis
- Resellers: Businesses that buy products from manufacturers or distributors and sell them to end customers without making significant changes
- Affiliates and referral partners: Individuals or businesses that promote products or services of other businesses and earn commissions on resulting sales
Embracing indirect channels can be a strategic approach for maximizing market penetration, amplifying brand presence, and fostering long-term growth.