Limited Time Offer: Save 40% on PRO with code GOPRO2018 »
Become a Member
Guides and Reports
Show All »
Metrics & ROI
Search Engine Marketing
More Marketing Topics »
Corporate Training Solutions
See All »
Schedule of Events
Virtual Conference Series
Speak for Us
Products and Services
Post a Question
Quick Start Guide
Find and Post Jobs
Real-World Education for Modern Marketers
Join Over 600,000 Marketing Professionals
Ask your question ... sign up today! It's FREE!
Just for Fun
Topic: Student Questions
Search more Know-How Exchange Q&A from Marketing Experts
This question has been answered, and points have been awarded.
Posted by Anonymous on
6/23/2004 at 4:24 AM ET
How does the value of distribution channel functions change when they become internet based?
6/23/2004 at 2:12 PM
The value goes up
6/23/2004 at 2:32 PM
This is quite a complex question - the short answer is that the values shift.
Things like physical location of retail outlets become unimportant while the quality of the warehousing, stock control and deliver mechanisms become more important.
To answer this question, I suggest you map out a step by step flow of what happens under both scenarios (traditional and Internet based) from both the retailers and customer's perspective.
Look at the factors that influence each one of these steps and assess if what is an asset in one scenario becomes a liability in another.
6/23/2004 at 5:20 PM
What happens to the value of distribution channel functions when they become Internet based largely becomes a manner of disintermediation and reintermediation.
As Michele said, values shift, however I would say that it is more along the line of tectonic plate activity!
For example, in an Internet B-to-C, disintermediation happens when the manufacturer bypasses the wholesalers and retailers directly selling to consumers.
So clearly, the wholesalers and retailers now have no value - and no business.
Typically this will happen were you find inefficient layers of supply/distribution networks. This varies greatly between industries and even more so between different countries.
When manufacturers connect directly with consumers and shorten the supply/distribution chain, inefficiencies can be eliminated, product delivery time can be decreased, and manufacturers can build closer relationships with consumers.
The result - their value skyrockets because this building relationships is a real benefit!
The type of businesses that can benefit the most and add the most value are those that can use the Internet as a replacement for the information channel from consumers back to manufacturers, so that demand can still be gauged and orders can be placed.
In addition, value is also added to those players in the supply/distribution chain when the Internet can also provide the opportunity for manufacturers to directly contact consumers to provide product or order information.
This reduces if not eliminates the need and therefore the value for traditional intermediaries - there goes their business again!
However, consumers still need to select among a large group of manufacturers online, which is not an easy thing to do.
So, there is now an opportunity to add value back in and this in the form of online assistance which has emerged and which replaces the value and role of traditional intermediaries.
They are known as reintermediaries, they fill new value-adding intermediary roles in the electronic/digital environment. For the reintermediaries, the Internet offers new ways to reach new customers, new ways to bring value to customers, and new ways to generate revenue.
Some reintermediaries are rivals to traditional retail store, while others are operations established by the traditional retailer. Other reintermediaries cooperate with the manufacturer or retailers to provide a needed service and value to the seller or distributor in the online environment. Other reintermediaries are pure-play e-tailers who fill a unique niche.
Examples: Online retailers such as Walmart.com, shopping portals (shopping.com, bizrate.com. nextag.com) comparison-shopping agents (pricingcentral.com, pricegrabber, bestshopperschoice) and directories such as Yahoo.
I hope that helps.
BACK TO TOP
Post a Comment
The Four Most Compelling Design Trends for 2018
by Pamela Webber
The Ultimate Grammar Cheat Sheet for Writers [Infographic]
by Laura Forer
The Future of Email: Four Questions and Answers for 2018
by Eric Wanta
How to Create Engaging Social Media Campaigns That Get Attention
by Ben Sailer
The Brand-Content Preferences of Different Age Groups
by Ayaz Nanji
See more marketing articles »
MarketingProfs uses single
sign-on with Facebook, Twitter, Google and others to make subscribing and signing in easier for you. That's it, and nothing more! Rest assured that
provide your social data to 3rd parties
contact friends on your network
post messages on your behalf
interact with your social accounts
Your data is secure with