Differences Between Indirect and Direct Sales Channels. How Might Amazon Cause Product Suppliers to Rethink Conventional Models of Distribution?

Assignement marketing

ASSIGNMENT: Watch the video: https://www.youtube.com/watch?v=qQPVF7nysgg. Discuss the differences between indirect and direct sales channels. How might Amazon cause product suppliers to rethink conventional models of distribution?

There are advantages and disadvantages to direct distribution channels. The same goes for indirect channels. It is the job of the managers and others involved to find the most effective means based on the firm's specific needs. Direct channels tend to be more expensive to start running and can sometimes require significant capital investment. Warehouses, logistics systems, trucks and driving staff will need to be set up. However, once those are in place, the direct channel is likely to be shorter and less costly than an indirect channel. Direct selling can be difficult to manage on a large scale, but it often allows the manufacturer to have a better connection to its consumer base.

The most challenging part of indirect distribution channels is that another party has to be entrusted with the manufacturer's products and customer interaction. However, the most successful logistics companies are experts at delivering receivables in a way that most manufacturers cannot be. Indirect channels also free the manufacturer from any startup costs. With the right relationship, they are much simpler to manage than direct distribution channels.

Amazon could cause product suppliers to rethink conventional models of distribution with these multiple advantages:  Building a website is cheaper than opening a store, and one can reach customers online anywhere in the world without additional expense. This means e-retailers can expand into global markets or target an extremely focused segment, such as selling dog nail polish to a customer in Korea. Shopping is easy and comfortable for customers, and one can customize their experience based on past sales and preferences. Online retailers can increase their sales and profits faster than a brick and mortar establishment because selling online offers the advantage of being open twenty-four hours a day, seven days a week. People can find the brand and interact with it when you establish an online presence including tapping into a whole new (potential) customer base. Also, while traditional advertising is very costly, if you do get involved in digital advertising the cost is nominal.