The business environment is constantly reinventing itself with businesses combining new methods to improve efficiency. According to Schoenbachler & Gordon (2002), it is now necessary for businesses to change or risk being driven out of business by competitors. Top of the factors that have been a driving force in the business scene is technology. Through the years, technology has constantly changed due to individual’s demand for efficiency. This continued development has enabled people to connect and communicate more easily. The incorporation of technology into business has contributed to the efficiency of service delivery to consumers. A major technological incorporation into business is the use of the internet to transact between individuals and businesses. With the use of internet, a consumer can be able to connect with a producer without having to go through intermediaries. To some extent, an individual can be able to order products directly from the factory. An epitome of this is whereby individuals can be able to order a laptop from dell without having to go through intermediaries. This direct contact leads to a scenario referred to a direct distribution. Overall, I was able to find out viability of direct distribution as an emergent business trend. In addition, I was able to realize the challenge, which is extinction, faced by channel intermediaries. This paper aims at looking at some of reasons as to why I believe the question was answered.
The overall reasons as to why different firms are embracing e-business in distribution (direct distribution) can be best illustrated by discussions by various authors. According to Dent (2011), direct distribution allows firms to have a direct relationship with the customer; as opposed to using multichannel distribution. This fact has been pointed out by a discussant; Miss Rui Sun. The ability to relate directly with the customer is an advantage in a competitive environment. This is due to the business being able to observe consumption trends through the observation of the consumers. To this end, the producer can create products that augur with the dynamic needs of the consumer. This would lead to the creation of satisfied consumers; which means good business. This also minimizes loses for the firms in case of production of goods that consumers have outgrown.
Bidgoli (2004) further confirms that direct consumer distribution results in the elimination of intermediaries that create an unnecessary hindrance. On the discussion board, Mr. Jiang Wu has pointed out this point. However, with direct distribution consumers can be able to order directly for the exact type of goods that they need. In the case of intermediaries, a consumer might need a particular good that an intermediary does not have. This might lead to a loss of customers or an overall wastage of time as a product arrives from the producer. In other cases, a customer might need a product that is not supplied directly to a particular location. An example is the case of multinational companies operating in different geographical locations. A consumer who has moved from one geographical location can order products directly from the firm. Thus, the consumer is able to save time and resources.
In addition, Dalic (2003) reiterates that the use of direct distribution is able to save a company a lot of money that would have been use in the training of staff; in the case of multiple channels. There are vast numbers of employees needed ranging from those replying to customers queries to those enquiring from customers. To ensure efficiency, a firm must choose the right staff that has the right etiquette to deal with customers. Overall, a firm must incur further expenses in training the chosen employees. However, in the case of direct distribution, these vast numbers of employees are reduced as the customers are able to order directly from the firm.
Furthermore, Bidgoli (2004), argues that the use of direct distribution ensures consistency in distribution; an element that lacks in multiple distribution. In multiple distribution or even distribution through intermediaries, different customers are handled by different individuals and managers. A company might end up losing the overall consistency regarding its message when the respective duties are split up. Each individual in the distribution channel ends up creating goals that are consistent with their needs and interests. This lack of consistency could end up causing confusion to the customers. In addition, inconsistency loses an impact that could be created by the consistent repetition of information to potential customers. Another advantage of direct distribution, as pointed by Mr. Shaun Pinnington, is the ability to expand the market. If a firm was operating locally, its market would be limited to the extent that the business can be able to cover physically. However, in the case of using e-business, a firm can be able to cover a wide geographical area. To some extent, as the world is continuously developing, there can be said to be no limitation to the area that a business can cover. This wide coverage can lead to a business acquiring new customers and new markets.
However, direct distribution through the use of the internet has its own shortfalls. One of the major shortfalls according to discussant is the issue of security. According to one discussant, Mr. Cameron Keith Oakley, there is a possibility of the occurrence of fraudulent transactions. He also points out at the possibility of identity theft. This issue would make customers to suffer huge amounts of losses; an aspect not found in the use of intermediaries. Another issue that raises concerns amongst consumers is the inability to examine products. A customer might end up getting a product that does not best suit their exact demand.
In addition, direct delivery through the use of the internet could lead to difficulties associated with timely delivery. Dent (2011) reiterates that a hitch or delay by the transporters could lead to customers have to wait for long periods. The author also points out a complication that could arise in case of returns. If a customer does not like a product, the company could suffer huge losses in transportation costs; to and fro. In cases where customers are unable to return the product, they might opt not to buy from the company again. Overall, this would lead to a loss of customers for the business.
On the issue of the elimination of intermediaries, I can conclusively say that the era of physical intermediaries is sadly coming to an end. The sadness is reiterated in the fact that many of the physical old-fashioned intermediaries will be left unemployed. However, with every individual nowadays turning to the internet, there seems to be a trend of direct contact between firms and customers. Holden, et al. (2008) reflects that almost all aspects of a business have been turned into a virtual affair. The authors state that continued innovation in increasing the speed of dial-up connection speeds has further promoted the era of e-business and direct distribution. In addition, personal computers have been promoted age of direct distributions. Majority of individuals have access to the internet and computers at their fingertips. Thus, and individual can just order for a product and expect it delivered within a stipulated time. Mr. Wenbo Quan, another discussant, points on this ability of customers to purchase with much ease. This has led to the elimination of the need for physical intermediaries. Prior to this era, an individual had to go to a physical location to access a particular good. This physical contact between customers and firms created a necessity for physical contact. However, development of virtual contact, this physical contact has been eliminated. The customers and firms do not even need to meet physically for a transaction to take place. Technology has managed to eliminate all that and in the process eliminating physical middlemen.
According to Neale (2000), firms have turned to efficiency oriented production and delivery to customers. This is whereby firms produce products as they are demanded by customers. Neale uses Dell Company to illustrate this new mode of production. Dell Company produces and delivers products personalized products customers as it orders them. A customer is able to get a product made, customized, and delivered in a less than a week. This efficiency oriented production style is continuously eliminating the need for intermediaries. Distribution intermediaries are usually given finished products to supply to customers. In the case that customers order directly and the firm does not have ready goods, then the intermediaries are eliminated. Overall, the use of intermediaries in distribution is coming to a conclusive end.
In conclusion, the information that I amassed during the discussion has answered my question. The arguments tabled were ingenuously tailored to augur with the question at hand. In addition, the use of supporting available literature on the issue helped to reinforce those arguments that were provided by the different individuals. Furthermore, the references provided managed to induce an interest for further reading regarding the topic at hand. In this perspective, I can say that direct distribution, as an emergent trend, is becoming the preferred mode of distribution for firms. The ease in the way that the internet is enabling firms to have a direct contact with customers is slowly swallowing the use of multiple distribution channels. In addition, the era of intermediaries is slowly coming to a closure. Direct distribution, through the use of the internet, is emerging as the preferred method of distribution; by both customers and producers.
Dalic, T., 2003. The Effect of the Internet on Sales Management. Munich: GRIN Verlag.
Dent, J., 2011. Distribution Channels: Understanding and Managing Channels to Market. 2 ed. Philadelphia: Kogan Page Publishers.
Holden, G., Belew, S., Elad, J. & Rich, J. R., 2008. Wiley Pathways E-Business. illustrated ed. New York: John Wiley & Sons.
Neale, M. A., 2000. Technology. West Yorkshire, : Emerald Group Publishing.
Schoenbachler, D. D. & Gordon, G. L., 2002. Multi-channel shopping: understanding what drives channel choice. Journal of Consumer Marketing, 19(1), pp. 42 - 53.