Distribution

• It’s vital to get the product to the consumer
• A channel of distribution is the route a product takes from the manufacturer or producer to the consumer.
• A product usually passes through intermediaries on the way from producer to consumer eg. Retailers, wholesalers and agents
• Retailers are shops who sell to the consumer. They're usually the final stage in the distribution channel.
• TESCO, Argos and Amazon are retailers
• Wholesalers make life easier for retailers and manufacturers
• Wholesalers buy goods from manufacturers in bulk and sell them in smaller quantities to retailers. This is called “breaking bulk”
• Wholesalers make distribution simpler. Without a wholesaler, the manufacturer would have to make separate deliveries to lots of retailers, and send each and every retailer and invoice
• Wholesalers can store more goods than a retailer can - they act as the retailers storage cupboard
• Agents, such as travel agents, sell products to customers on behalf of businesses. They’re often paid commission for the products that they sell.
• There are different channels of distribution
• A business will look at the product, the market and the size of the business when deciding which distribution channel to use
• DIRECT SELLING (two stage channel) : Manufacturer to consumer
• INDIRECT SELLING (three stage channel) : Manufacturer to Retailer to consumer
• INDIRECT SELLING (four stage channel) : Manufacturer to Wholesaler to Retailer to consumer
• Direct selling can also be done through door to door sales, TV shopping channels, telephone sales and websites. Accountants, electricians and hairdressers sell their services direct to the consumer.
• Indirect selling ( 3 stage channel ) - This is a common distribution for recreational its such as clothes, shoes and homeware.
• Indirect selling ( 3 stage channel ) - Retailers are usually in places that are convenient for the consumer such as a shop on the high street.
• Indirect selling (four stage channel) - This is a traditional distribution channel used for groceries eg by supermarkets. However, because those at each stage of the distribution channel want to make a profit, it can increase the cost to the consumer.
• Retailers often use multi - channel distribution
• Multi - channel distribution is when businesses sell through more than one method e.g online and in-store. It gives flexibility for customers and a wide market coverage for manufacturing.
• Online distribution means firms can provide services instead of products
• Online distribution is the streaming or downloading of media content
• Delivery via online distribution is direct and almost immediate once an item has been purchased
• One advantage of online distribution is that it is cost savings. This can allow the price of downloads for the consumer to become cheaper than actually buying a physical film or book.
• Another advantage of online distribution is that it is environmentally friendly than the production of physical goods. Using online distribution can reduce pollution from transporting physical goods across countries.
• Another advantage of online distribution is that it can be relatively easy and can be run from anywhere, with an Internet connection. The set up costs are also low, which means that there are opportunities for fast growth + return.
• One disadvantage of online distribution is that it may require a different set of skills to traditional distribution, so staff may need further training in IT skills.
• Another advantage is that the business will also have more working capital as it’s not tied up in stock, which also needs to be stored in distribution centres.
• Why is online distribution becoming more popular?

  • Buying through online distribution is easy and cheap, more and more consumers are buying online. To stay competitive, more businesses are moving to online distribution.
• By moving to online distribution it has led to changes in social trends, eg more people now watch shows on streaming services instead of TV.