What Are Indirect Sales?
Indirect sales involve third parties, like partners or affiliates, selling goods or services instead of a company’s own staff. These sales can complement direct sales efforts or replace the need for in-house sales teams. Common indirect sales channels include resellers, specialty stores, and big-box retailers.
In contrast, direct sales occur when consumers buy directly from the manufacturer.
How Indirect Sales Work
Indirect sales allow companies to scale quickly without hiring more sales staff. This approach is often used when product demand exceeds a company’s hiring capacity or when the product’s price doesn’t justify a large sales force. Indirect sales also help align costs with a reseller’s success.
However, there are downsides. Fees can cut into profits, and using affiliates or resellers can reduce control over brand messaging and customer service. Managing third-party sellers is harder, making problems more difficult and expensive to fix. Communicating company goals directly to customers may also be challenging.
Key points:
- Indirect sales use third parties to market and sell products to consumers.
- Examples include affiliate networks, resellers, independent salespeople, and retailers.
- Risks include added fees, reduced brand control, and inconsistent customer service.
Indirect Sales vs. Direct Sales
Indirect sales leverage partner resources — networks, knowledge, and relationships — to expand a company’s sales efforts, enabling rapid, cost-effective scaling.
Conversely, direct sales involve direct customer engagement, often requiring substantial investments in sales teams, resources, and infrastructure. Amid the current disruption, AI advancements, and market noise, understanding this distinction is crucial.
A best practice is to utilise both approaches. Building indirect channels first can be challenging without a solid grasp of your sales process.
Recognising this distinction shapes your sales strategy, customer interactions, and long-term growth and retention.
How Indirect Sales Drives Business Growth
This model helps businesses expand by leveraging the networks and expertise of partners. Imagine indirect selling as an army of octopuses, each partner is an octopus with up to eight arms, representing their sales team, customers, prospects, and other relationships. Together, these partners generate new opportunities that might have otherwise gone unnoticed.
Indirect Sales Strategies
Explore various strategies to leverage indirect sales. Understanding them helps you choose the best approach for your business and market needs.
Reseller and Distribution Channels
Resellers and distributors, or value-added resellers (VARs), buy products to sell to end customers. VARs excel in sectors needing installation, customisation, or training, offering complete solutions that accelerate deals. Distributors manage bulk purchases and logistics, while resellers boost value through added services. This channel is ideal for businesses entering new markets or regions without a direct presence.
Affiliate Marketing and Referral Programs
Affiliate marketing involves individuals or companies promoting products for a sales commission. Referral programs reward customers or partners for recommending products, growing the customer base through trusted referrals. Both strategies are cost-effective for reaching new segments and boosting brand credibility.
Strategic Partnerships and Alliances
Strategic partnerships are formal agreements where companies market and sell each other’s products, expanding market reach and credibility. These alliances work well when partners offer complementary products. For instance, a tech company might partner with a hardware manufacturer to bundle products and provide a more complete solution to customers.
DISCLAIMER: This article is for informational purposes only and is not meant to be official business advice. BARTERCARD has no relations with any company mentioned and neither endorses or disparages indirect sales as a business practice.
