Distribution Channels: Types and Examples (2026)

Distribution channels are how the customer gets their product after purchase. There are multiple channels to choose from: you could sell directly through your online store, partner with retailers, or use intermediaries like wholesalers. 

“I think channel distribution is really important and to keep that tight to your chest,” says Jin Chung, cofounder of Coop Sleep Goods, in a Shopify Masters interview. “It’s really tempting to go anywhere and everywhere that will have you, but for us, we focus on just a few small channels.”

In this article we’ll cover everything you need to know about product distribution channels, as well as specific examples of them in action.

What is a distribution channel?

A distribution channel is the path used to get a product from the manufacturer or creator to the end user. Distribution channels can be long or short, direct or indirect.

When a product distribution method is “direct,” the manufacturer is selling directly to the end user without an intermediary. When the distribution channel is “indirect,” the product changes hands several times with intermediaries before reaching the ultimate consumer.

Types of distribution channels

There are two main types of distribution channels: direct and indirect. Some businesses also take a hybrid approach with multiple levels of distribution in one supply chain.

Direct distribution channel

A direct distribution channel is when a company sells directly to consumers through direct mail, a catalog of its own products, or its own ecommerce site. For example, entrepreneurs who create and sell handcrafted products from their own websites are using a direct distribution channel.

Direct distribution may be a good fit if:

• You want to own customer relationships and data
• You have the infrastructure to handle direct fulfillment and quality control 
• You’re able to market your business 

“We’re prioritizing DTC [direct to consumer] because it actually puts capital back into our bank accounts faster,” says Michelle Razavi, cofounder of Elavi, in a Shopify Masters interview. “It’s a fast conversion cycle. It allows us to gather data to re-market to and understand our consumer at a much deeper level than we would in a retail channel.”

Indirect distribution channel

Indirect distribution channels include intermediaries between the manufacturer and consumer, such as:

• Wholesalers or distributors
• Agents or dealers
• Retailers
• Consultants
• Manufacturers’ representatives
• Catalogs

For example, Coca-Cola has an intensive multi-tier distribution strategy. They manufacture the syrups for their sodas, then send those to local bottling partners who mix the final drinks. Retailers buy those prepackaged bottles to sell to their own customers.

This strategy also works for smaller brands. Heaven Mayhem, for example, works with retail partners to distribute their products. Retailers can also connect with other Shopify stores and sell their products without inventory costs using the Shopify Collective sales channel. 

“We generally look at retail as marketing,” says Founder Pia Mance in a Shopify Masters interview. “It’s amazing to reach new customers and be in those channels, especially with these big online players. The customer also gets visibility into Heaven Mayhem. So, it’s actually worked really well from a marketing perspective.”

Hybrid distribution channel

A hybrid distribution strategy combines both direct and indirect channels in one. Toilet paper brand Who Gives a Crap, for example, sells directly to consumers through their online store. They also work with retail partners like Whole Foods in the US.

Multiple distribution channels offer greater flexibility, letting you scale up (or down) one channel based on unit economics. According to a Shopify survey of store owners, businesses selling through both business-to-business (B2B) and business-to-consumer (B2C) channels are significantly more likely to have scaled than those selling B2B only.*

“Customer acquisition on the DTC side is hard,” says Ashwinn Krishnaswamy, a DTC expert, in a Shopify Masters interview. “But [retail] is not going to solve your problems. It opens up a market, but you’re going to have a different set of problems that are equally challenging.” 

Levels of distribution channels

Distribution channels are often described by how many intermediary levels sit between the manufacturer and the consumer.

Distribution channel examples

Here are two examples to illustrate how the right distribution channels depend on your unique business model.

Wineries: direct and indirect channels combined

The beverage alcohol industry uses a three-tier indirect distribution channel. Distillers and wineries sell to distributors, who sell to retailers, who sell to consumers. Wineries like Hall Wines also sell directly to consumers onsite at wineries and through their online store. 

Using both approaches lets wineries reach a mass market through an indirect distribution channel and a smaller market through direct distribution via on-site retail operations that they own.

Plus, in a 2025 Shopify survey, 68% of store owners in the food and beverage space reported operating both B2C and B2B channels—the highest dual-channel adoption rate of any vertical.*

Angelus Direct: from wholesale-only to a multichannel mix

Shoe care brand Angelus Direct started selling their shoe care products exclusively to wholesalers. But it presented one major challenge: “If we lost a major account, it was a huge blow,” says CEO Tyler Angelos. 

Tyler spearheaded Angelus Direct’s technology transformation. They migrated to Shopify to overhaul the B2B customer experience, and opened up a DTC ecommerce storefront to unlock a new direct distribution channel.

Tyler describes the new mix as a much healthier balance. They’ve boosted profit margins by two to three times. “Now about half comes through our Shopify store directly, 30% to 40% through third-party marketplaces, and 20% through our retail store.”

Online distribution channels for ecommerce

Shopify’s sales channels let store owners sell through multiple distribution channels from one unified back end:

• Online store. Design a storefront with AI, accept online payments, and manage inventory with a Shopify website. Shopify also supports native wholesale selling with a password-protected B2B portal on your ecommerce website.
• Marketplaces. Shop makes your catalog visible to more than 250 million shoppers, while Shopify Collective lets other Shopify brands dropship your products. The Marketplace Connect app also lets you sell on Etsy and Amazon using your Shopify admin. There’s also the Faire app to sell inventory to B2B buyers on that marketplace.
• Social commerce. In a 2025 Capgemini survey, 35% of respondents said they had bought a product through a social media platform. Shopify integrates with Facebook and Instagram, TikTok, Pinterest, Google and YouTube to show inventory and process orders wherever customers browse.
• Agentic storefronts. Data shows AI-referred sessions to Shopify stores convert at double the rate of organic traffic. “It’s a new way for our story and product details to show up at the exact moment someone is asking real questions with real intent,” says Victor Tam, CEO and cofounder of Monos.

How to choose a distribution channel

The distribution channel you use is fluid throughout the life of your business. You may start out only wanting to use a direct channel, but as you grow you may want to change your main distribution channel focus to indirect. 

Before choosing your distribution channel route, think about:

• How does the end-user like to purchase these types of products? Does the consumer want to touch and examine the product or is it a product that the target audience likes to buy online? 
• What, if any, are the local, regional, or national regulations regarding the product category’s distribution channels? Some distribution arrangements carry federal disclosure requirements per the FTC’s Franchise Rule.
• Does the customer need personalized service?
• Does the product itself need to be serviced?
• Does the product need to be installed?
• How is the product typically distributed and sold in your industry?

“We organically realized there was market potential for that particular product, and then tiptoed into retail with a distributor until it really started to take off and become a pretty meaningful business,” says Tara Lundy, chief brand officer at LifeStraw, in a Shopify Masters interview. 

“We started to really reorient the company toward a retail model that could then help fund the humanitarian work as opposed to a humanitarian model that then had a little side hustle as a retail business,” Tara says.

Intensive, selective, and exclusive distribution

Intensive, selective, and exclusive distribution strategies influence where your products appear and how readily available they are. 

Distribution channel impact on price

The distribution channel you choose will have an impact on which pricing strategies you use. One study found that when a brand launched a direct channel, retailers cut their orders by 19% on average and wholesale prices rose 21%.

With indirect distribution, a product that goes from the manufacturer to a distributor before it goes to a retail outlet needs to be priced at wholesale so that both the distributor and retailer can mark up the price.

With direct distribution channels you often can keep the price lower than if you go the indirect route. Peter Dering, founder of Peak Design, says in a Shopify Masters interview: “Our retail stores are the most profitable. That’s because we’re shipping products in bulk via freight to those individual stores as opposed to our ecommerce, which is second best with much higher last-mile delivery costs.”

*Based on a 2025 survey of 500 Shopify store owners conducted in English across Australia, Canada, the United Kingdom, Ireland, New Zealand, and the United States. Respondents were established businesses with two or more years on the platform. Results reflect the experiences of this specific sample and may not be representative of all businesses.