The whole point of this thesis is to analyze process of merchandise distribution based on company XY. Sole distribution for economy and companies presents quite a challenge due increased demands of customers in link to the products, which link directly to the production. This connection demands to be explained, so first part of the thesis defi nes distribution, explains every step along the way, key elements, participants and indicators. In the second part of my work, the terms of distribution channel and physichal distribution are presented, and each one of them is dedicated a chapter. In the first chapter distribution channel, types of distribution channel and the most important choices in channel selection are presented. There are also explained direct and indirect sale channels on international markets, as well as sales channel through mediator and without mediator. In the second chapter physichal distribution is described in detail and its importance in the system. The third part (practical part), also the last part of the work describes the distribution process of the goods in the selected company XY and the system of distribution of consumer goods is analyzed.