Distribution Channels (2)
- Last-mile delivery from distributor storage
As with the former, this design requires the distributor to hold manufacturer’s stock but differs in that the distributor uses its own vehicles and staff to deliver products to customers. This may be economical, provided the distance to customer is within economical/practical limits. The prospect of owning and staffing a fleet of vehicles is, for many distributors, an unpleasant and uneconomical prospect. - Customer pickup from manufacturer or distributor storage
Customers make the journey to the manufacturer or distributor and take away their purchase in their own or a hired vehicle. For the manufacturer and distributor, this is an efficient system, only partially compromised by the cost of holding stock. The expense and coordination effort required by managing transportation is avoided, but storage space is required, as are despatch/warehouse operatives and customer services staff. For the end customer, the system is acceptable provided the distance of travel is within reasonable limits. - Customer pickup from retail storage
This is the cash-and-carry (or basic supermarket) model, in which customers use their own vehicles to travel to a large facility where they can make medium to large volume purchases and relocate them immediately after purchase. For manufacturers, this design has benefits, such as coordination simplicity (orders are at high-volume and occur on a regular basis to a small number of premises – routes and facilities are known and trusted – and wholesalers might even arrange collection via a third party or their own in-house logistics). For the end customer too, the process is simple – replenishment occurs on and as-and-when basis and quantity is usually limited by vehicle capacity only. For customers living long distances from the retail point, the design can be problematic. The retailer/wholesaler must have a broad national physical presence in order to serve as many customers as possible, and to allow as many customers access to their stores. The model capitalises on the economies of scale afforded by regional hub systems and the relatively simple retail and collection model. The model also facilitates cross-selling: customers may visit with the intention of purchasing a particular product in a particular quantity, but encounter sales and promotions, so may leave with more purchases or greater quantities than they would had they used a different design.