Distribution Channels

4793 Words Oct 23rd, 2008 20 Pages
31
THE RETAIL
DISTRIBUTION
CHANNEL
C H A P T E R
2
Early in 2005, IBM Business Consulting Services released a survey that compiled in-depth interviews with more than 100 sales, marketing, and merchandising executives at over 20 consumer products and retail companies. Only 9 percent of the retailers felt their suppliers had “a good understanding” of their business objectives. The gist of the survey was that retailers felt the product manufacturers have focused their efforts on the end users of the products (the consumers), without giving as much priority to the needs of the other members of their distribution channels—namely, the retailers to whom they sell.1
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There are several types of participants that
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These distinctions between various types of stores will be important as we discuss their participation in certain distribution channels.
Wholesalers
Wholesalers are intermediaries or middlemen who buy products from manufacturers and resell them to the retailers. They take the same types of financial risks as retailers, since they purchase the products (thereby taking legal responsibility for them), keep them in inventory until they are resold to retailers, and may arrange for shipment to those retailers. Wholesalers can gather product from around a country or region, or can buy foreign product lines by becoming importers. The term “wholesale” is often used to describe discount retailers (as in
“wholesale clubs”), but discounters are retailers, not technically wholesalers.
And in B2B channels, wholesalers may be called distributors.
Agents and Brokers
Agents (sometimes called brokers) are also intermediaries who work between suppliers and retailers (or in B2B channels), but their agreements are different, in that they do not take ownership of the products they sell. They are independent sales representatives who typically work on commission based
Participants in the Distribution Channel 33 on sales volume, and they can sell to wholesalers as well as retailers. In B2B arrangements, this means they sell to distributors and end users.
Resident sales agents are good examples in retail. They reside in the country to which they sell products,
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