Business Revision Guide: 2.4

• Physical distribution

  The movement of goods from the producer to the consumer
• Physical distribution channels

  • Channel 1: Producer to consumer, missing out wholesalers and retailers
  • Channel 2: Producer to retailer
  • Channel 3: Producer to wholesaler to retailer
• Channel 1


  • Producer makes more profit, rather than sharing it with a wholesaler and/or retailer
• Channel 2


  • Producer can benefit from keeping some of the profit that would have been made by the wholesaler, while being confident the retailer will be able to market the goods to consumers
• Channel 3

  • Wholesaler can break up bulk stock and offer retailers the goods in the quantities that they can afford, and which they can sell, so, more retailers are willing to sell the goods
• Digital distribution

  When the product can be downloaded by the consumer directly from the seller, as in the case of books from Amazon onto a Kindle or music from Spotify onto a MP3 player
• Due to improved technology, digital distribution has become more popular in recent years
• Advantages of digital distribution

  • The consumer can buy the product 24/7
  • It is a method of selling, without the costs of a physical shop or transport
  • The business can sell throughout the world and so has more potential customers
  • A business may be able to improve its image with skillful use of websites
  • Less staff may be needed which will cut costs
• Disadvantages of digital distribution

  • Physical goods cannot be distributed digitally
  • It is a very competitive market as consumers can compare prices and products online
  • Customers who do not own a computer will be unable to buy online
  • Some customers do not like sharing their bank or credit card details online
  • Digital content can easily be copied and illegally shared for free online