Most producers do not sell their goods directly to the final users. Between them stands a set of intermediaries that perform a variety of functions. These intermediaries constitute a distribution channel.

Art&Craft microenterprise could delegate some of the selling job to intermediaries. Although this delegation means a loss of some control over how and to whom the products are sold, producers gain several advantages by using channel intermediaries:

Many producers lack the financial resources to carry out direct marketing.

Direct marketing simply is not feasible for some products.

Producers who do establish their own channels can often earn a greater return by increasing their investment in their main business.

Intermediaries normally achieve superior efficiency in making goods widely available and accessible to target markets. Through their contacts, experience, specialization, and scale of operation, these specialists usually offer the firm more than it can achieve on its own.

Once it has been chosen the markets, it is time to decide about the channels of distribution. They can be divided into the direct channel and the indirect channels. Indirect channels can further be divided into one-level, two-level, and three-level channels based on the number of intermediaries between manufacturers and customers.

Direct Channel Zero-level Channel (Manufacturer to Customer) Direct selling doesn’t involve the inclusion of an intermediary and the manufacturer gets in direct contact with the customer at the point of sale. Direct channels could be used by manufacturers whose target audience is geographically concentrated.

Indirect Channels (Selling Through Intermediaries). When a manufacturer involves a middleman/intermediary to sell its product to the end customer, it is said to be using an indirect channel. Indirect channels can be classified into three types:

- One-level Channel (Manufacturer to Retailer to Customer): Retailers buy the product from the manufacturer and then sell it to the customers.

- Two-Level Channel (Manufacturer to Wholesaler to Retailer to Customer): Wholesalers buy the bulk from the manufacturers, breaks it down into small packages and sells them to retailers who eventually sell it to the end customers..

- Three-Level Channel (Manufacturer to Agent to Wholesaler to Retailer to Customer): Three level channel of distribution involves an agent besides the wholesaler and retailer who assists in selling goods.