Channel Sales: A Definitive Guide (With 9 Examples)

By Indeed Editorial Team

Published 20 September 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Organisations often partner with several types of people and tools to reach more customers and meet their business goals. One way they might do this is by exploring channel sales. Learning about this concept can help you understand why businesses might use this method and how it works.

In this article, we define channel sales and share key details about this concept, like what are some common channel options and how to set up a sales channel.

What Are Channel Sales?

Channel sales are methods a business uses for selling a product or service with other people or tools. While some companies use a single sales channel, like third-party retail, others use a variety of channels to offer their products and services to potential customers. Other sales teams use a specialised strategy, where some products and services are widely available and others are only accessible through a specific channel. For example, a shoe manufacturer might sell their sneakers in black and white in shoe stores, with additional colour options available on their website.

15 Examples Of Common Sales Channels

Here are 15 common sales channels that companies use to sell products and services:

1. Personal selling

Personal selling is where you offer products or services directly to people. There are two main ways companies might do this, through retail sales or direct-to-customer channels. With the retail option, customers find your store or website and search for a product, where salespeople might help. With DTC, the salesperson contacts potential customers to share information about their products and businesses.

Related: What's the Difference Between Sales and Business Development?

2. Sales agents

Sales agents are people or companies that sell products for people. They often research potential consumers to help companies find new clientele. Working as the intermediary between buyers and sellers, these professionals often negotiate pricing to ensure that customers pay what the companies expect.

3. General online marketplace

A general online marketplace is a hub where both buyers and sellers can interact. People can post their own products to these sites and sellers can shop for particular items. These sites often cost a fee for sellers, but this could be a more inexpensive option than hosting and maintaining your own website.

4. Auction marketplace

An auction marketplace is where companies can post their products and consumers can bid on them. This means they pay what they think an item is worth. From there, the seller sells the product to the person who bids the highest on an item. People often look for specific items on auction marketplaces.

Related: What Is the Difference Between Sales and Marketing?

5. Crafts marketplace

Crafts marketplaces are those where companies or individuals can sell handmade items. These can include clothing, gifts or other specialty items that people create. These marketplaces often benefit sellers as they may coordinate payments or offer services like paying shipping fees to help their partners.

6. On-demand marketplace

An on-demand marketplace is one where people place custom orders. Rather than keeping an inventory of items, sellers often produce these items as they receive orders. For example, a specialty furniture store might make custom dining room tables. They might have the materials in their inventory, but once the customer picks the style and size, they produce it for shipping.

Related: How to Increase Sales Volume (with Tips and Steps)

7. Resellers

Resellers are organisations or people that purchase products and sell them to new customers. They commonly buy large quantities of products and sell them to people at a discounted rate. Reselling could be a good channel for companies with limited distribution or marketing resources, as resellers can reach many people.

Related: 12 Effective Sales Tools To Become A Better Salesperson

8. Affiliate partners

Affiliate partners are those that work with companies to help sell their products. These are often other businesses that share values with the main company or complement their products or services. In this agreement, the parent company pays a certain amount in compensation to their affiliates for each product they sell. This might be a percentage or a fixed amount.

Related: What Does a Retail Salesperson Do? (Duties and Career Path)

Factors To Consider When Setting Up Sales Channels

If you're a sales professional for a company, you might use several sales channels to reach potential customers. Here are some factors company leaders consider when they choose sales channels for their products and services:

  • The size of the company

  • The age of the product or service

  • Any access requirements, like computer software or high-speed internet

  • Shipping costs for the product

  • Existing sales channels

  • Customer expectations

How To Set Up A Sales Channel In 5 Steps

Here are five steps a sales professional might take to set up a new sales channel for a product or service:

1. Reflect on the product or service

The first step in setting up a sales channel is to consider what channel might be most effective for the product or service. Create a report on the product or service that includes the following information:

  • Customer demographics: Identifying who might buy this product or service can help you determine which channels they use when they're shopping.

  • Pricing information: Considering the price point can help you decide whether the price justifies partnering with a third party to make the sale.

  • Access details: If your product or service requires any specific tools to buy or use, like forklifts or professional assembly, you might choose to sell it through an online service or direct sales.

  • Budget for sales: Some sales channels have membership fees or other associated costs, which might affect your ability to use the channel.

  • Size of sales team: If the sales team is small, the company might benefit from third-party retail or white-label selling, which requires less effort from sales representatives.

Related: Valuable Sales Skills For A Resume to Help You Stand Out

2. Choose a channel

Use the information you've collected about your product or service to choose a channel that fits your needs. Considering the intended customer and your budget can help you find a channel that reaches your customers while saving money. For example, a company selling a new skincare product might have a limited sales budget and an intended audience of young adults. The sales team might identify a social media platform with low membership fees and a high percentage of users within their target age group. By building a presence on this platform, they can sell their product to interested customers.

3. Find and recruit partners

If you choose to partner with a third-party organisation for your sales strategy, consider the following information when looking for a partner:

  • Partners in a similar niche as you: For example, a website that sells products similar to your own has an audience that is already looking for that type of product.

  • Partners with sophisticated marketing strategies: You are relying on this partner to sell for you, meaning it's necessary for them to reach a wide audience and convert them into sales. Research key metrics such as their web traffic and social media engagement before deciding on a partner.

After finding candidates to partner with, the next step is to recruit them. Do this by:

  • Reaching out to them directly and outlining what you are looking for

  • Describing how they would benefit from the relationship

  • Advertising for them

4. Define the parameters

Define the parameters with any partners who agree to work with you by establishing how each party generates income, how the sales process works, how the shipping process works and what is expected from each party. If you are building a channel with internal partners, like the company's marketing team or sales associates, you might create an internal document or project plan that assigns tasks to each team.

5. Monitor the sales channel

Tracking the metrics for each sales channel can help you identify which channels are most effective at selling your product or service. Many sales management platforms monitor revenue from different sales channels and provide the results in comparative reports or interactive dashboards. If you work with a partner, like a sales agency, you can also monitor their sales and compare the revenue to the amount of money the company is spending to use them.

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