Employing a online strategy to sell directly to consumers and to compete directly with traditional wholesalers and retailers.
Software developers have used the internet as a highly effective distribution channel to complement sales through wholesalers and retailers. Selling online directly to end users has the advantage of cutting out the costs and margins of software wholesalers and retailers as much as 30-50% of the retail price. In addition, allowing customers to download their software purchases immediately via the internet eliminates the costs of producing and packaging CDs. However, software developers are still strongly motivated to continue to distribute their products through wholesalers and retailers to maintain broad access to existing and potential users who, for whatever reason, may be reluctant to buy online. Despite the channel conflict, there are two major reasons why manufactures might want to aggressively pursue online sales and establish the internet as an important distribution channel alongside traditional channels:
1.they make a far bigger profit margin from online sales
2.it helps educate buyers to the ease and convenience of purchasing online, thus encouraging more and more buyers to migrate to buying online where company profit marking are greater
This sell direct positioning strategy is well suited for companies in industries where there are good long-term prospects for the internet to evolve into a company’s primary distribution channel. In such instances, incurring the channel conflict in the short term and competing against traditional distribution allies makes good strategic sense.