Distribution Channels and Strategies

Rack Jobs

  • Intermediaries sell products (e.g., chips) to grocery stores.

  • They handle delivery, shelf stocking, and display maintenance.

Cash and Carry Wholesalers

  • Wholesalers like Smart and Final or Costco sell directly to the public.

  • No delivery contracts; customers pick up purchases.

  • Businesses might buy from them if it's cheaper than distributors.

Drop Shippers

  • Intermediaries between manufacturers and online customers.

  • Manufacturers ship in bulk to drop shippers.

  • Drop shippers fulfill individual orders.

Agents vs. Brokers

  • Agent: Represents a single company, with a legal obligation to act in its best interest.

  • Broker: Represents multiple companies, obligated to serve the interests of the group.

Distribution Strategies

  • Intensive Distribution: Placing products in as many locations as possible (suitable for moderate price/quality).

  • Selective Distribution: Limiting distribution to specific outlets (e.g., Nike's running shoes in specialty stores).

  • Exclusive Distribution: Using only a few retailers in specific areas (e.g., Ferrari dealerships).

Non-Store Retailing

  • Electronic Retailing: Online websites.

  • Social Commerce: C2C sales, like Facebook Marketplace.

  • Telemarketing.

  • Kiosks and Vending Machines: Offering diverse products, including movies (Redbox) and freshly made pizza.

Multilevel Marketing (MLM)

  • Company recruits sales representatives who earn from direct sales and recruitment.

  • Legitimate but often unprofitable for sales reps; most lose money or earn very little.

  • Difference from illegal pyramid schemes lies in the source of revenue: product sales vs. recruitment fees.

Channels of Distribution

  • Overall: Intermediaries from manufacturer to retailer to consumer.

  • Corporate: Company owns all parts of the distribution system (e.g., Nike stores).

  • Contractual: Franchises with contracts (e.g., Ford dealerships).

  • Administered: Independent entities with looser contracts (e.g., Oreos selling to Albertsons).

Supply Chains

  • Encompass all activities from raw materials to the final consumer.

  • Channels of distribution are part of the supply chain.

Logistics

  • Managing the flow of goods from origin to destination.

  • Inbound Logistics: Getting materials needed for manufacturing.

  • Outbound Logistics: Distributing finished goods.

  • Materials Handling: Managing potentially hazardous materials.

  • Third-Party Logistics (3PL): Outsourcing logistics to specialized companies (e.g., JCPL).

Specialties Within Logistics

  • Freight Forwarders: Consolidate smaller shipments into full container loads.

  • Intermodal Shipping: Using multiple modes of transportation (truck, ship, plane, train).

  • Storage Warehouses: Controlling conditions like humidity, temperature, and atmospheric composition to prolong product life.

Careers

  • Logistics and Supply Chain Management: High-paying due to complexity.

  • Retail Management: Varies in pay; Walmart GMs earn significantly more than Starbucks managers.

  • E-commerce Management: Online version of retail management.

  • Distribution Reps: Sales roles, ranging from retail to large contracts.

Academics

  • Community Colleges: Retail management degrees, logistics programs near major ports/hubs.

  • Bachelor's and Beyond: Specialized degrees in logistics, supply chain management, and warehouse operations.