For Australian SMEs deciding how to get their products to market, the question of direct sales versus channel distribution – using resellers, wholesalers, or other partners – often comes down to margins. While direct sales *can* appear more profitable on the surface, a considered analysis reveals a more nuanced picture. We consistently find that, for most businesses, a well-managed reseller channel ultimately generates superior margins, particularly when factoring in growth potential.

The initial appeal of direct sales is understandable. You keep 100% of the revenue, less the cost of sales and marketing. However, this overlooks several critical factors. Building a direct sales team is expensive – salaries, commissions, training, and management overhead quickly add up. More importantly, it limits your reach. You’re constrained by the size of your team and their geographic coverage. Expanding nationally, or even just beyond a major centre, becomes a significant investment.

Here’s where a reseller channel shines. Consider these key insights:

• Leveraged Sales Capacity: Resellers already have established sales teams and customer relationships. You’re essentially extending your reach without the upfront cost of building it yourself.
• Market Coverage: A network of resellers provides access to markets you couldn’t efficiently reach alone, including regional areas and specialised customer segments.
• Margin Sharing is Not Margin Loss: While you share revenue with resellers, the increased volume they generate often more than compensates for the reduced margin per unit. Think of it as a percentage of a larger pie.
• Focus on Core Competencies: Outsourcing sales allows you to concentrate on product development, innovation, and brand building – activities that directly impact long-term profitability.

We’re seeing a trend towards ‘hybrid’ models, where businesses start with direct sales to establish a strong brand presence and then strategically onboard resellers to accelerate growth. This approach allows you to maintain control over key accounts while leveraging the channel for broader market penetration. Looking ahead, businesses that optimise their channel programs – providing strong support, training, and marketing materials – will be best positioned to capitalise on opportunities in 2026 and beyond.

Ultimately, the optimal approach depends on your specific product, target market, and growth ambitions. However, for the majority of Australian SMEs, a well-structured reseller channel offers a more sustainable and profitable path to market. We recommend conducting a thorough cost-benefit analysis, comparing the total cost of sales for both direct and channel approaches, and modelling potential revenue growth under each scenario.