Jeremy Mitchell_Week 4 Assignment 2 Scenario (1)

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Jeremy Mitchell American Public University System TLMT 341: Logistics Management Instructor: Dr. Ernest Hughes October 29, 2023

Costco and Apple Distribution Approach Direct distribution is used by Costco's manufacturer. Most of Costco's inventory comes from direct purchases from manufacturers and indirect distribution channels. Products are delivered to the warehouse in large quantities through pallet shipping, making direct distribution the sole method used by Costco. They choose direct distribution because it saves money by reducing the amount of time workers spend handling the goods. This is the case, for instance, with a few of the home and cooking goods they provide. Contigo is an especially well-known manufacturer of infant gear. To get their goods inside Costco, they must purchase from that business. Within their own warehouses, they produce and retail goods under the "Kirkland Signature" label. When it comes to selling their own items in bulk, their distribution methods really shine. Diapers are a staple of their "Kirkland Signature" line of goods. I've used them on my own children. Their own brand of diapers is identical to Huggies, except it costs less. The number and quality of these diapers are why so many parents choose to purchase this product. Their paper goods, including paper towels, toilet paper, etc., from the Kirkland brand are also very popular. These items have the same fantastic reputation as the top names, but at a lower price. Direct distribution is shown by the presence of the company's items at Costco warehouses. Costco employs this strategy because it allows them to minimize costs by shortening the supply chain while still maintaining low pricing ( Qianjin Fang, 2019). Since Apple sells its products both in its own stores and via partnerships with other merchants and manufacturers, it makes use of both direct and indirect distribution channels. Apple is able to rake in billions annually because of its innovative direct and indirect distribution channels. Apple had previously solely used a direct distribution method in which consumers bought only from the corporation until the development of its retail shops. Now that Apple uses an indirect strategy in addition to its previous direct one, the company is seeing better results. Due to their importance as a mobile network provider, Apple granted AT&T the first privilege to sell Apple products. The direct and indirect distribution channels for Apple products are not

limited to just two, since all Apple products are offered in both Apple retail locations and through third-party merchants. Apple's latest acquisitions are included here, so are names like "Beats by Dre." Yet, thanks to Apple's acquisition of "Beats by Dre," they both reaped the rewards. Apple's online store serves as an additional direct distribution channel, complementing the company's brick-and-mortar locations. Apple and its customers both benefit from having retail stores where they can interact with the company face to face. Apple's success is due in great part to the third-party retailers that sell its products via indirect distribution channels, despite the fact that Apple's own retail outlets are a source of good customer encounters and efforts. Direct distribution involves a one-to-one relationship between a manufacturer and a client. Having a direct line of communication between producers and consumers makes it easier to sell and transport goods. Distribution occurs via an intermediary chain through the indirect channel, as described by Investopedia. Customers often want a mix of direct and indirect routes of distribution, since the outcomes of just using direct channels may not be as desirable as those acquired via a more well-rounded strategy. In this scenario, Apple, which is independent and sells solely Apple products, brought in a middleman since direct sales weren't as successful as they might have been. Costco, being a supermarket, has to work with many different vendors and shoppers to supply its shelves with a large selection of products. When it comes to paper products and diapers, as I said before, Costco has one straight path, and that's within their own brand, "Kirkland's Signature," with this, you get the same product as other brands, but at a lower price. Direct and indirect channels of distribution, in my opinion, are crucial to the success or failure of any business. Only a small fraction of firms can thrive when relying only on direct channels of distribution. Their slowing sales are just another unfortunate development (Gennaro, Cuofano, 2023). Apple: Direct Distribution: Apple predominantly uses a direct distribution channel for its flagship products like the iPhone, iPad, and MacBooks. Customers can purchase these products

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