Logistical and Transactional Functions of Channels of Distribution

 

The channel of distribution performs a variety of functions such as selling, buying, risk-bearing, assembling, storage, transportation, grading, maintenance, post-purchase service, market information, financing, etc.

Functions of Channels of Distribution.

The functions performed by Channels of Distribution can be categorized in to three main groups. They are:

1. Transactional Functions.
2. Logistical Functions.
3. Facilitating Functions.

Transactional Functions

Functions necessary for the transaction of goods are called transactional functions. Risk bearing, buying, and selling come under this function. Producers, after producing the goods, sell it to the intermediaries. Distributors or intermediaries sell these goods to the next intermediaries or the end-user. Likewise, the users of the goods buy it from the distributors. Buying, selling, and risk-bearing comes under the transactional functions. Distributors purchase goods from the producers in anticipation of selling it to the consumers for a profit. Due to the fall in price, the distributors may suffer a loss in the process. So they are bearing the risk of loss of money. Some goods are perishable. For example vegetables and fruits, may get spoiled during the transit. Break down of the truck, which transfers the perishable goods may spoil the goods. Distributors bear the risk of such damages. Buying and selling the goods to help the transfer of title from the producer to the user.

Logistical Functions

Logistical function performs the flow of goods, resources, and information between the point of origin to the point of consumption in order to meet the requirements of the customers. Logistics involves functions like the integration of information, inventory, material handling, grading, packing, transportation, warehousing, packaging, the security of the goods, etc. To facilitate the supply of goods on time, proper storage is necessary. Perishable goods like meat, fruits, vegetables, etc. demand more attention in storage. Logistical functions perform such activities. With the help of the Logistic function, goods are made available by the distributors to the consumers at the time of need.

Facilitating Functions

Facilitating functions facilitate both physical exchange and transaction of goods. It involves the post-purchase services, maintenance, financing, market information, etc. Distributors help the customers to choose the appropriate product for consumption. Distributors convey the demand of the customer to the manufactures. Also, the distributor conveys the opinion of the consumer to the producer. After-sales services and maintenance are required for certain goods. Distributors facilitate such functions. Sellers sometimes provide financial assistance to the buyers. They also provide necessary information about the products to the customers. Facilitating functions involves financing, market information, after-sales service, etc.

The channel of distribution performs a variety of functions such as selling, buying, risk-bearing, assembling, storage, transportation, grading, maintenance, post-purchase service, market information, financing, etc. Electronic goods need after-sales service and maintenance. Perishable goods need proper storage facilities. These are the main function of the Channels of Distribution.