The practice of dual distribution enables a company to expand the channels available to sell products and services to customers. The use of dual distribution has become an integral global growth strategy by introducing new marketing channels to interact with potential customers previously beyond the reach of the company. For example, domestic-based companies that relied primarily on retail stories for distribution lacked the channels to enter global markets and attract new customers. The advent of internet-based selling enabled the marketing channel for overcoming this limitation.

Market expansion addresses the challenge of maturing products and shortened lifecycle by increasing markets and finding new sources of demand. Direct sales may also reduce the supply chain costs and enable the company to achieve higher margins on products. For example, a company may have less inventory storage and carrying costs when shipping directly to a customer and not having to hold products for third-party orders. Dual distribution offers economies of scale that enables a company to optimize resources and gain more control over its product brand that may not always be a priority to the third-party provider.

A dual distribution system is not without risk and disadvantages:

• This strategy can result in the company becoming a competitor to the third-party providers selling its products and services. This competition may result in less demand and affect the provider's ability to sustain its business model and remain a marketing channel to the producer.
• Competing with the third-party provider channel may create vertical risks including animosity that motivates providers to promote competitive products not available for direct purchase.
• Direct selling may create artificial sales growth if direct sales are from customers who traditionally purchased from a third-party provider.

Independent retailers have argued that dual distribution is an unfair practice and method of competition. Evidence suggests merits exist in this perception. The reorganization and closing of many prominent electronics and appliance retailers (e.g., Computer City, Circuit City, and Radio Shack) in recent years can be attributed in part to manufacturers selling directly to customers.

Furthermore, the advantages of direct selling are not readily available to independent retailers that often rely on volume to achieve profitability. Retailers have higher costs to manage brick and mortar stores or are unable to match the price and services of the manufacturer when making products available for online purchase. The growing use of dual distribution has led to anti-trust suits and drawn the attention of the Federal Trade Commission (FTC). The FTC has explored cases of collusion associated with dual distribution.