A sales model is the strategy a company uses to get its products to consumers. A company using a direct sales model sells directly to consumers instead of selling its product to resellers such as department stores and third-party web sites. The primary benefit of this type of sales model is that it often allows a company to keep product prices lower and to offer faster, more personalized customer service.
It may be impossible to count the different sales models used by businesses. Every business has a different strategy that changes based on market variables, customer needs, and changes in technology. Yet sales models usually fit into one of three categories: direct, reseller-only, or mixed sales. Companies using a mixed sales strategy make some of their sales directly but also sell their product to third parties for resale. Many products sold in infomercials are sold using a mixed sales strategy because they are sold on television directly by the manufacturer but can also be bought at department stores, usually at higher prices.
The direct sales model came into use in the mid- and late 1800s when manufacturers realized they could sell directly to customers through catalogs. Instead of selling their product to a store, which then increased the price and sold the product to consumers, manufacturers were able to fill orders through the mail. They did not have to worry about distributing their product to stores or manufacturing huge amounts that might or might not sell. They were able to ship directly to customers and to manufacture only enough of a product to fill the orders that came in.
Common access to the Internet created a whole new forum for the direct sales model. Manufacturers were able not only to sell directly to their clients, but also to interact with them in real time, which allowed for improved customer service. The Internet also took away one of the major obstacles faced by companies using this sales model, which was visibility. Before the Internet, companies using a direct sales model sometimes had difficulty reaching consumers because the company's products were not in chain stores and department stores where people shopped every day.
Disadvantages to the direct sales model still exist in spite of the Internet. Companies using other sales models expect to share some of that burden with distributors. With direct sales, all the burden of marketing and distribution falls on the manufacturer.