DISTRIBUTION

MANAGEMENT
https://www.youtube.com/watch?v=afr6c2JIewc
Distribution management
is part of the supply chain
process that ultimately
delivers goods to end-users
or consumers. Managing
distribution is essentially
managing the movement of
goods, whether it be from a
wholesaler to a retailer or
from a retailer to a
consumer. DISTRIBUTION
MANAGEMENT
 DISTRIBUTION MANAGEMENT
- Distribution management focuses on the timely delivery of
goods and prevention of loss (such as ensuring delivery of
perishable goods without spoilage) through distribution
channels. It is part of the larger logistics system that includes
the planning and creation of processes for managing supplies
of goods and transport. It involves several aspects, such as
packaging, routing, warehousing storage, and fleet
management.
 DISTRIBUTOR
A distributor may be any individual or business
that delivers goods to a customer. For example,
a pharmaceutical company is a distributor of
products to pharmacies, while an e-commerce
business, such as Amazon, is a distributor of
goods to consumers.
Effective distribution management reduces
shipping costs and delivery times and increases
customer satisfaction.
DISTRIBUTOR
PROFILES
Distribution
Channels
 WHOLESALE
DISTRIBUTION
Wholesale distribution channels are business
to business distribution channels charged with
delivering goods from raw material suppliers or
manufacturers to wholesalers. For example, oil
companies must move their product to oil refining
companies.
 RETAIL
DISTRIBUTION
Retail distribution channels are concerned with
the delivery of goods from wholesalers to
retailers, such as a cosmetics company
delivering goods to various retail stores.
 EXCLUSIVE
DISTRIBUTION
Exclusive distribution channels are those that
deliver goods from a manufacturer only to
specifically authorized or designated customers.
For example, auto manufacturers deliver their
cars to authorized dealers.
 E-COMMERCE
A relatively new distribution channel is that of e-
commerce, represented by entities such as Amazon or
eBay. The direct delivery of goods to consumers through
e-commerce websites has led to a number of changes in
distribution methods. For example, Amazon has
numerous order fulfillment centers from which it can
arrange to have goods shipped to customers. It enables
it to offer a more timely delivery service than would be
possible if all goods were warehoused in and shipped
from a single location.
What Affects Distribution
Management?
 1. Buyers’ demands
● The first is the variation in buyers’ demands.
Throughout the year, buyers have different demand
levels for goods. For example, the Christmas
season sees an upsurge in consumer buying of all
kinds of products. Therefore, companies need to
plan for how to handle increased purchases, orders,
and deliveries.
 2. Shipping optimization
● Shipping optimization is another factor that can impact
effective distribution management. For example, it is more
cost-efficient for a company to ship all of the goods going to
one destination together, such as in a single truckload,
compared to creating multiple, less than capacity shipments to
the same destination.
● Efficient shipping of perishable goods is always important for
any business that handles such items because any losses
through spoilage will negatively impact profits.
 3. Other factors
● In addition, there are a number of other factors that can impact
efficient distribution and that distribution management needs to
consider. They include such things as shipping delays that can be
caused by vehicle accidents or breakdowns, airport delays, or delays
related to severe weather events.
● Potential changes in government regulations regarding transportation
or shipping are another factor that distribution management teams
must create plans for dealing with. Product recalls or packaging
problems can also affect distribution. Buyers may derail efficient
distribution by doing things such as making changes to orders or to
the address for delivery of goods.

● Because of all the various factors related to distribution management,

Two types of Distribution Channels

https://youtu.be/5PIerrMJoI8
 Direct Indirect
A direct distribution channel allows Vs. An indirect channel moves products
consumers to buy and receive goods from the manufacturer through various
directly from the manufacturer. Direct intermediaries for delivery to the
distribution is a direct-to-consumer consumer. Indirect distribution involves
approach where the manufacturer third parties, like warehouses,
controls all aspects of distribution. wholesalers, and retailers.
 A) Selling through direct channels
● This is the oldest, shorter and the simple channel of distribution. The producer
sells the product directly without involvement of any middle man. The sale can
be made door to door through salesman, retail stores and direct mail. Certain
industrial and consumer goods such as clothes, shoes, books, hosiery goods,
cosmetics, household appliances, electronic goods etc., may be sold through
direct contact. Perishable goods such as vegetable and fruits can also be sold
directly.
● Advantage of selling through direct channels It is simple and fast. It is
economical.
● Disadvantages of selling through direct channels Non-availability of expert
services of middle man. Large investment is required.
 B) Selling through indirect channel
According to this method of indirect selling, product is passed on to the customers through intermediaries, known as wholesalers,
retailers and agents. These channels may be as under:

1. Producers -> Wholesalers -> Retailers -> Customer Two level Channel:
It is commonly used channel of distribution. It is also known as traditional or normal channel of distribution. This channel is useful for
small producers for small means. The channel is used for consumer goods. The common practice is that the manufacturer sells
goods in large quantity to wholesalers, who sell goods to retailers in small quantity. Finally goods are sold to customers in pieces.

2. Producer -> Agent -> Retailer -> Consumer or Two level Channel: The common practice in this two level channel is that the
goods are sold to the agent in bulk. The agent sells goods to retailer, who sells goods to customers in pieces. This channel is
suitable where the retailers are few and geographically centered. This channel is commonly used in textile, machinery, equipment
and agricultural products.

3. Producer -> Agent -> Wholesaler -> Retailer -> Customer or Three level Channel: The common practice in this three level
channel is that goods are sold by the producer to the agent, who sells it to the wholesaler, who sells to the retailers who finally sells
goods to customers. This is the longest channel of distribution. This practice is useful, when the producer wants to the relieved of
the problem of distribution. This channel is popularly used in textile.

4) Producer -> Retailer -> Customer or one level Channel: Under this channel the producer sells goods to retailers, who sell the
goods to customers. This channel is popular with the departmental stores, chain stores and supermarkets etc., because these are
large scale retailers. Generally readymade garments, shoes home appliances and automobiles are sold through this channel.
Levels of
Distribution Intensities
1.Intensive Distribution: As many outlets as possible. The goal of intensive
distribution is to penetrate as much of the market as possible.

2.Selective Distribution: Select outlets in specific locations. This is often based

on a particular good and its fit within a store. Doing this allows manufacturers to
pick a price point that targets a specific market of consumer, therefore providing
a more customized shopping experience. Selective distribution caps the number
of locations in a particular area.

3.Exclusive Distribution: Limited outlets. This can mean anything from luxury
brands that are exclusive to special collections available only in particular
locations or stores. This method helps maintain a brand’s image and product
exclusivity. Some examples of companies that enact exclusive distribution would
be high-end designers like Chanel or even an automotive company like Ferrari.
 Quiz
Identification.
1. It is part of the supply chain process that ultimately delivers goods to
end-users or consumers.
2. any individual or business that delivers goods to a customer.
3. A direct-to-consumer approach where the manufacturer controls all
aspects of distribution.
4. Involves third parties, like warehouses, wholesalers, and retailers.
5. The goal of _______ distribution is to penetrate as much of the market
as possible.
6. This can mean anything from luxury brands that are exclusive to special
collections available only in particular locations or stores.
7-10. What are the four distribution channels?
Thank
You!
https://www.investopedia.com/ask/answers/052115/what-difference-between-direct-and-indirect-distribution-
channel.asp#:~:text=A%20direct%20distribution%20channel%20allows,and%20disadvantages%20for%20a%20business.

https://www.repsly.com/blog/consumer-goods/everything-you-need-to-know-about-product-distribution

https://corporatefinanceinstitute.com/resources/knowledge/other/distribution-management/

https://neilpatel.com/blog/distribution-channels/