Different customers need different ways to receive and use a product. Original editorial painting created for this article.
Compare the cost of reaching buyers with the work of serving them
By Arbab Naseebullah Kasi, Chief Executive Officer - CEO, Feel Worldwide Foundation Inc.
A product can be right for a customer and still arrive through the wrong sales channel. The customer wants one item delivered quickly. The supplier can ship economically only by the carton. A retailer likes the product but needs a distributor already in its purchasing system. A university department wants to buy, but its procurement office needs specifications, approved terms and a valid purchase order first.
These are practical obstacles between demand and revenue. They become especially important after an entrepreneur has selected a US market and is deciding how to serve it.
A route to the customer determines who introduces the product, who accepts the order, who holds inventory, who gets paid first and who handles the problem when something goes wrong. Direct sales, distributors, marketplaces and institutional buyers distribute those responsibilities differently. Choosing among them requires more than comparing commission percentages.
This article focuses on physical products, with lessons that also apply to services. The examples are educational, not promises of sales or profitability. Published sources and channel terms were checked on November 9, 2026. Fees, eligibility and contract terms can change, so confirm the rules that apply to your product, seller location and agreement before committing money.
Start with the purchase your customer already makes
Once the target market is chosen, make the next decision smaller. Describe one buying situation: who needs the product, who approves the purchase, how much is ordered, where it must arrive and what happens after delivery.
A household buying a storage container, a shop buying twelve containers for resale and a campus buying two hundred for an approved project may need the same underlying product. Their purchasing processes are different. The right channel makes the transaction convenient for the buyer without making it unmanageable for the seller.
The SBA’s marketing and sales guidance connects sales planning with pricing, customer support, costs and operations, including returns. That is a useful discipline: assess the complete buying experience rather than only the campaign that attracts attention.
For business buyers in a selected region, the Census Bureau’s County Business Patterns provides establishment data by industry and employment size. It covers establishments with paid employees. Use it to investigate the local concentration of relevant retailers or other business customers, while remembering that an establishment count is neither a list of qualified leads nor evidence of purchasing authority or demand for your product.
Then ask actual prospective buyers how they purchase this category. If they buy only through an approved distributor, a beautiful direct checkout will not solve the access problem. If they need technical explanation before ordering, an anonymous listing may leave too much unanswered.
Direct sales give you more control and more work
Direct sales can happen through your website, your sales team, a showroom or a customer relationship developed offline. The defining feature is that your business sells to the end buyer without a reseller purchasing the product for another sale.
This route can make sense when buyers value a distinctive product, explanation, customization or ongoing service. You can present the offer in detail and learn directly from customer questions. You also carry the cost of attracting buyers and maintaining that relationship responsibly.
A payment button is only one component. Someone must produce useful product information, answer questions, reconcile payments, arrange fulfillment and manage returns. For direct business sales, add the time spent preparing quotes and collecting overdue invoices. Founder time still consumes capacity even when it does not appear as a cash expense.
As a concrete cost reference, Stripe’s US standard pricing lists 2.9 percent plus $0.30 for a successful domestic online card transaction. That is a payment-processing price, not the cost of finding a customer. Additional charges can apply, and Stripe states that original processing fees are not returned when a payment is refunded.
Direct selling therefore needs two budgets: one for completing the order and another for bringing a suitable buyer to it. If advertising becomes expensive, the absence of a marketplace commission may offer little comfort. If repeat customers return without another paid campaign, the economics may improve. Measure that behavior instead of assuming it.
A distributor needs a reason to carry your product
A distributor can connect a supplier with buyers who already order through its network. Depending on the agreement, it may buy inventory, combine products from several suppliers, extend credit and deliver to accounts that a small producer would struggle to serve individually.
That access has a price. Your revenue is the amount the distributor pays you, not the eventual retail price. There must be enough room for the distributor’s work and, where relevant, the retailer’s margin as well as your own costs.
Before comparing offers, establish what the intermediary actually does. A distributor buying inventory is different from a sales representative earning a commission or a platform transmitting orders. Ask when ownership transfers, who carries unsold stock, whether orders are firm and what deductions may be taken from payment.
The published UNFI SVHarbor terms, for example, provide for invoices to be paid net of applicable deductions, chargebacks and fees under supplier policies or other agreements. These terms illustrate why a quoted purchase price is not automatically the cash a supplier will receive. They do not establish a universal distribution fee or replace the agreement for a particular relationship.
Request the relevant freight rules, packaging requirements, returns policy, promotional obligations and deduction procedures before pricing the deal. A chargeback is a deduction for a stated contractual or operational issue; know what can trigger one and how to challenge an error.
Look carefully at exclusivity. A broad exclusive territory can remove other ways to reach customers while providing little assurance that the distributor will actively sell. Seek qualified contract advice on scope, performance expectations, reporting, duration and exit rights. A catalog listing alone does not show that customers are buying.
The useful question is what verified access and service the distributor adds, and whether that contribution justifies the margin and dependence you accept.
A marketplace brings an audience with its own rules
A marketplace can place an offer where buyers already search and compare. It can also make competing products unusually easy to see. Sellers need to understand category eligibility, fees, performance requirements, buyer communication rules and the records they can retain or export.
Amazon’s published US pricing lists an Individual plan at $0.99 per item sold and a Professional plan at $39.99 per month, plus other selling fees. Referral fees vary by category. Home and Kitchen, for example, is listed at 15 percent, subject to the applicable minimum and fee rules. These are specific published charges, not an estimate of the total cost of operating there.
Separate marketplace access from fulfillment. A business can evaluate selling in a marketplace and decide independently how eligible orders will be fulfilled. Fulfillment by Amazon includes picking, packing, shipping, customer service and returns handling. Its costs also depend on the product and services used, with separate considerations such as storage and inventory removal.
Outsourcing those tasks can free capacity, but it does not make inventory mistakes inexpensive. A product that sits too long still ties up money. A product that arrives damaged still requires investigation. Model the complete fulfillment arrangement using actual dimensions, weight, inventory timing and expected returns.
Avoid building the entire business around one account without understanding the consequences of an interruption. Keep product records, financial records and operational knowledge under your own control where permitted. Maintain a realistic alternative route rather than assuming customers can simply be moved elsewhere on demand.
Institutional buyers purchase through a process
Universities, hospitals, school systems, companies and public bodies can be substantial buyers. They may buy directly, through a distributor or through an approved marketplace. Institutional selling is therefore a buying context that can overlap with the other routes. Compare its procurement requirements as well as the path the order follows.
The important difference is how an organization authorizes and accepts a purchase. The person who will use the product may not control the budget, approve the supplier or release payment. A promising conversation should lead to clarification of those roles, not premature production.
The University of California’s published purchase terms illustrate the operational detail. They link payment to acceptable invoices and goods or services provided and accepted, require invoices to reference the agreement or purchase order, and provide inspection and remedies for nonconforming supply. The university’s policy page identifies the applicable published version. Other institutions have their own requirements.
Ask about specifications, receiving hours, delivery appointments, packaging, training, warranty support and invoicing. For a service, ask how completion will be accepted and what support continues afterward. Find out whether the purchase requires a competitive process or an existing contract vehicle. Supplier registration by itself is not an order.
The potential attraction is a larger purchase or recurring need. The exposure is the work and cash required before payment, together with dependence on a small number of accounts. A large order can strain a small supplier if its inventory, delivery or staffing costs fall due long before the customer pays.
Compare the money left after the work
The following figures are invented illustrations in US dollars. Only the Stripe and Amazon charges explicitly identified above come from published schedules. Prices, demand, acquisition costs and all other amounts below are assumptions, not benchmarks, quotations or predicted results. Sales tax is excluded for simplicity; actual transaction charges must use the applicable fee base. These calculations show money remaining after the listed costs, before unlisted overhead and income tax.
For an illustrative direct sale at $60, assume $18 in landed product cost, $8 for packing and delivery, $12 for customer acquisition, $3 for order-handling labor and a $1.50 allowance for expected return-related costs. A domestic online card payment at Stripe’s stated rate costs $2.04. The amount remaining is $15.46.
For an illustrative $60 merchant-fulfilled Amazon order in the Home and Kitchen fee category, use a $9 referral fee. Allocate approximately $0.40 per unit for the Professional subscription across an assumed 100 monthly units. Assume the same $18 product cost, $8 packing and delivery, $3 handling labor and $1.50 return allowance, but $8 for advertising. The amount remaining is about $12.10. At lower volume, the subscription cost per unit rises. This example does not use FBA or include its fees.
For an illustrative distributor sale at a $30 wholesale price, assume $18 product cost, $2 for consolidated handling and freight, $2.50 for agreed selling allowances and $0.50 for financing and administration. The amount remaining is $7. That lower amount may accompany less selling work per unit, but only if the distributor relationship actually delivers that benefit.
For an illustrative institutional sale at $40 per unit, assume $18 product cost, $3 delivery, $4 of allocated specification and service preparation, $2 for expected acceptance-related correction costs and $1 for financing and invoicing. The amount remaining is $12. Order size and payment timing determine how much cash must be committed before collection.
The direct route appears strongest in these invented figures because of the assumptions chosen. Increase its acquisition cost from $12 to $20 and its remainder falls to $7.46. Increase the distributor’s deductions by $3 per unit and its remainder falls to $4. Neither result predicts what will happen. The exercise identifies which assumptions deserve testing before inventory or contracts become difficult to unwind.
Write down the promise after delivery
Every route should have a clear answer to a practical question: when the buyer reports a missing, damaged or unsuitable item, who does what next?
Separate the work from the financial responsibility. One party may answer the customer while another bears replacement costs. A fulfillment provider may process a return while the seller remains responsible for the commercial loss. A distributor may accept a shipment and still have contractual rights concerning later defects or unsold stock.
Specify the return destination, approval process, inspection, refund timing and disposition of goods. Ask whether returned stock can be resold, must be repaired or requires disposal. Where products need installation, spare parts or local service, confirm those arrangements before promising delivery across a wide territory.
For an international supplier, include customs responsibility, import requirements, landed cost and the practical location for returns in the channel assessment. An overseas return shipment can consume the value of a low-priced item. Use qualified advisers for product compliance, customs and contract questions rather than expecting a channel partner’s participation to settle them automatically.
Choose a main route before adding more
A young business rarely has unlimited capacity to run separate price lists, inventories, customer-support processes and order systems. Choose a main route that matches the buyer’s habits and your ability to deliver. Add another when there is a clear customer need and enough operational capacity to support it.
Set the comparison in writing. Name the buyer, the route, the expected cost per completed order, the cash needed before payment and the person responsible for service. Record the evidence behind each estimate. Separate a quoted fee from an assumption and an expression of interest from a purchase commitment.
Review the result after a period appropriate to the buying cycle. Look at orders completed, contribution after the relevant costs, days to collect payment, returns, service time and repeat purchases. For a slow institutional process, assess documented procurement progress without treating it as revenue.
When combining channels, check for conflicts over territory, packaging, pricing, customer communication and service. A larger direct discount may undermine a retail partner’s economics. Separate pack sizes or service offers can sometimes make the distinction clearer, subject to contracts and applicable law.
A good route makes the buyer’s purchase easier and leaves the seller able to honor it. That is the standard to carry into US market entry: access that can be supported, costs that can be explained and promises that can be kept.
Build practical enterprise knowledge together
Business educators, experienced distributors, procurement professionals and community organizations with a practical idea for improving entrepreneurs’ understanding of customer channels can propose a focused collaboration with Feel Worldwide Foundation Inc.. Describe the audience, the contribution you can offer and the intended learning outcome. An inquiry is a starting point for discussion, not a promise of buyer introductions, contracts, financing or market access.
If you would like to support the Foundation’s broader mission, you can make a donation. Donations are voluntary and separate from any commercial opportunity.
