Distribution

• Channel of distribution 


  The route a product takes from the manufacturer/producer to the consumer
• Retailers


  Shops who sell to consumers ( usually the final stage of the distribution channel eg, Amazon )
• Wholesalers 


  Buy goods from manufacturers in bulk + sell then in smaller quantities to retailers
• Agents 


  Sell products to consumers on behalf of businesses, often paid commission for the products they sell eg, travel agents
• What are the different channels of distribution?

  • direct (2 stages)
  • indirect (3 stages)
  • indirect (3 stages)
  • multi-channel
  • online
• What is direct selling?

  2 stages: manufacturer —> consumer

  • Internet has made direct selling easier (e-commerce) allowing access to worldwide markets eg, eBay
  • Can be done through door-door sales, telephone sales + websites
• What is indirect selling (3)?

  3 stages: manufacturer —> retailer —> consumer

  • Common distribution channel for recreational items eg, clothes + usually located in places convenient for consumers
• What is indirect selling (4)?

  4 stages: manufacturer —> wholesaler —> retailer —> consumer

  • Usual distribution channel for groceries eg, supermarkets
  • Since each stage of channel wants to make profit, may increase cost for consumer
• Multi-channel distribution 


  When businesses sell through more than one method eg, online + in-store. Gives flexibility for consumers + wide market coverage for manufacturers
• Give an example of a type of business that may use multi-channel distribution

  Supermarkets + fashion retailers —> in-store and online stores which may lead to added costs but allows to target a wider market
• Online distribution 


  The streaming/downloading of media content via the internet (when firms can provide services instead of products)
• What are the advantages of online distribution?

  • Delivery is direct + almost immediate
  • Cost savings (no money spent on packaging)
  • Price of downloads can be cheaper (due to reduced costs for business)
  • More environmentally friendly (reduces transportation pollution + materials for physical products)
  • Relatively easy (can run from anywhere with wifi access)
  • Growth in 3rd party service providers eg, Spotify
  • Downloaded media content stored on devices
• What is a drawback of online distribution?

  Staff may need IT training