Distribution channels, explained. How your product actually gets to the buyer.

The short answer. Direct, indirect, or both.

A distribution channel is simply the path your product takes to reach the person who buys it. Marketing theory, going back to Philip Kotler's classic channel-length model, groups these into a small number of structures: a zero-level (direct) channel where the business sells straight to the customer, and one, two or three-level (indirect) channels where the product passes through one or more intermediaries, agents, wholesalers, distributors, retailers, before it reaches the buyer.

Most businesses don't pick one and stop. A SaaS company might sell direct to enterprise accounts through its own sales team while running a self-serve website for smaller customers, and a reseller programme for a specific vertical or region it can't cover itself. Each of those is a different channel serving a different segment, and they can coexist without conflict if they're built around genuinely different buyer types.

Why it matters. The trade-off underneath every channel decision.

Every distribution channel decision trades off the same three things: margin, control and reach. Selling direct keeps the full margin, keeps the customer relationship and data in-house, and gives you a direct feedback loop on what's working. It also means you carry the full cost and time of building demand, sales capacity and support in every market you enter.

Indirect channels give up some margin and some control in exchange for reach you couldn't build yourself, at least not quickly. A local distributor already has the relationships, the market knowledge and, often, the regulatory understanding a new entrant would spend a year building from scratch. Microsoft is the clearest large-scale example of this trade-off in action: the company has said for years that around 95% of its commercial revenue moves through its partner ecosystem, deliberately choosing reach and speed over doing everything direct, even at its scale and with its resources.

Neither approach is inherently better. The right answer depends on what the business actually needs at its current stage, and getting this wrong in either direction is costly: too much direct effort in an unfamiliar market burns time and cash on relationships a local partner already has; too much reliance on intermediaries too early can mean losing the customer feedback that shapes a still-changing product.

How it works. The main structures.

A distributor and a reseller are often confused but sit at different points in the chain. A distributor typically buys in bulk, holds stock, and supplies a network of smaller resellers or retailers across a defined territory. A reseller sells directly to the end customer, often without holding significant stock itself, and may specialise in a particular vertical, region or customer type. Getting this distinction right matters when you're negotiating terms, because the obligations and margin expectations at each layer are different.

For a company entering a new market rather than launching a new product, the same trade-off shows up as a market-entry decision: build a local presence directly, acquire or partner with a business that already has one, or work through a distributor or agent who represents the product without the company having a legal or physical presence there at all. In the Middle East specifically, this last route is common for companies testing demand before committing to the cost of a local entity.

A practical example. Choosing a channel for a new market.

Take a mid-sized software company that has proven its product in one market and wants to expand into a new region where it has no existing customers, no local team, and limited understanding of procurement norms. Going direct would mean hiring locally, building credibility from zero, and likely a slow first twelve months while the market learns who the company is.

A distribution partner or local reseller with existing relationships in the target sector can compress that timeline significantly, at the cost of a margin share and less direct control over how the product is positioned and sold. The right call generally comes down to how much runway the company has to absorb a slow direct entry, and how differentiated the product is: a genuinely unique product can often justify the slower direct route because buyers will seek it out regardless of who's selling it, while a more commoditised product usually needs the credibility and speed a local partner brings.

A reasonable middle path, and the one I usually recommend to founder-led teams testing a new market, is a limited indirect pilot: one or two local partners, a defined territory, and a clear review point after six to twelve months to decide whether to deepen the partnership, bring the market in-house, or exit. That structure limits the downside of getting the channel choice wrong while still testing demand with real local reach behind it.

Whichever structure you start with, write the terms down properly before the relationship begins: territory, exclusivity or lack of it, minimum performance expectations, and what happens if either side wants to end the arrangement. Channel disputes rarely come from bad intentions on either side; they come from an assumption one party made that was never actually agreed. A short, specific partner agreement, reviewed at the six or twelve-month mark alongside the results, solves most of the problems that otherwise surface a year in.