1. Back to Table of Contents

2. Distribution in E-Commerce
Chapter 13
Distribution in E-Commerce
Section
13-1
Channels of Distribution
Section
13-2
Physical Distribution 2

3. Section 13-1 Why It’s Important
Businesses can sell all they are able, but if their distribution methods are not well planned and executed, they will quickly lose credibility with their customers.
Section 13-1 3

4. Section 13-1 Key Terms distribution channel of distribution
intermediary
cybermediary
Web distributor
Web affiliate
aggregator
Section 13-1 4

5. Foundations of Distribution
In business, one of the important functions is delivering the right product or service in the right quantities in the right place at the right time.
Section 13-1 5

6. Foundations of Distribution
The plan for how a product will get from one place to another is often referred to as logistics.
Section 13-1 6

7. keeping track of inventory vehicle scheduling and control
Foundations of Distribution
Logistic Activities
receiving goods
warehousing
keeping track of inventory
vehicle scheduling and control
distribution of goods
Section 13-1 7

8. Foundations of Distribution
When a product is purchased for business use, the end user is called an industrial user.
When a product is purchased for personal use, the end user is called a consumer.
Section 13-1 8

9. How Distribution Works
Businesses that are unable to provide quality distribution will lose customers.
distribution the way the producer or manufacturer delivers products, services, or information to the consumer
Section 13-1 9

10. Channels of Distribution
Producers use a specific channel of distribution to move goods to the end user.
channel of distribution the path a product takes from producer or manufacturer to consumer
Section 13-1 10

11. Channels of Distribution
Direct distribution occurs when goods and services are sold from the producer directly to the customer.
Dell, the computer company, uses direct distribution.
Section 13-1 11

12. Channels of Distribution
A business that does not produce the goods or services it sells, but gets them from producers and then sells them to consumers uses indirect distribution.
Section 13-1 12

13. Channels of Distribution
A business that does not produce what it sells is an intermediary.
intermediary a business that acts as a third party or go-between in moving products from the manufacturer to the end user
Indirect distribution involves one or more intermediaries.
Section 13-1 13

14. Channels of Distribution
An e-commerce intermediary is called a cybermediary.
cybermediary an Internet channel of distribution that helps move products from the manufacturer to the consumer or industrial user
Section 13-1 14

15. Channels of Distribution
A cybermediary can be an e-tailer, which sells to the end user.
Section 13-1 15

16. Channels of Distribution
A Web distributor is another type of cybermediary.
Web distributor a business that markets and sells goods or services bought from a manufacturer on a wholesale basis to companies for use or for resale to the end user
Section 13-1 16

17. Channels of Distribution
A Web affiliate is a cybermediary that makes money by referring customers to e-commerce Web sites.
Web affiliate a business that forms a partnership with another online business and refers potential customers to the partner’s Web site for a commission or fee
Section 13-1 17

18. Channels of Distribution
An aggregator is another type of cybermediary.
aggregator a company that offers for distribution a number of products and services from a variety of manufacturers and producers
Many Web aggregators deliver information to customers.
Section 13-1 18

19. Channels of Distribution
An online wholesaler is a cybermediary that receives large shipments of products from many different producers.
It breaks the shipment into smaller batches for resale.
Section 13-1 19

20. Section Review 1.
What is a channel of distribution? How does direct distribution differ from indirect distribution?
What does a cybermediary do? Is a wholesaler a cybermediary?
What are logistics as they apply to distribution? What are some logistic activities?
What is a Web affiliate? How can a Web affiliate be helpful to an online business? 2. 3. 4.
Section 13-1 20

21. Section 13-2 Why It’s Important
To ensure efficient operations, businesses strive to keep their order processing streamlined.
Customer loyalty is closely tied to the satisfaction involved with each transaction and maintaining good service is essential to doing business.
Section 13-2 21

22. Section 13-2 Key Terms electronic customer relationship management
enterprise resource planning
best-of-breed
hosted E-CRM
Section 13-2 22

23. Physical Distribution
Order Processing
Physical Distribution
order
processing
transportation
stock handling
storage
inventory
control
Section 13-1 23

24. Order Processing
Purchasing a product initiates the system of physical distribution.
Using a successful order fulfillment system, employees can track customer orders, locate products, and resolve any problems that arise as items move from warehouse to shipping company to customer's doorstep.
Section 13-2 24

25. Electronic Customer Relationship Management Research
A critical function of the order-fulfillment system is customer care.
Electronic customer relationship management (E-CRM) is the cornerstone of good service.
electronic customer relationship management (E-CRM) software designed to manage and improve communication between a business and its customers electronically
Section 13-2 25

26. Electronic Customer Relationship Management Research
In the early to middle 1990s, most E-CRM systems were stand-alone programs used in call centers to keep track of customer contacts and concerns.
Section 13-2 26

27. Electronic Customer Relationship Management Research
As time went on, software vendors adapted existing enterprise resource planning (ERP) software applications to include E-CRM functionality.
enterprise resource planning (ERP) software originally developed to focus mainly on financial and human resources applications, but adapted to deal with customer relationship management issues, thus competing with E-CRM
Section 13-2 27

28. Electronic Customer Relationship Management Research
Other software vendors worked to perfect stand-alone E-CRM software and sell it based on a best-of-breed philosophy.
best-of-breed when a company focuses on a single product or service to make it the best in its field
Section 13-2 28

29. Electronic Customer Relationship Management Research
Today, best-of-breed and enterprise resource planning software coexist in the marketplace, while stand-alone programs generally have been phased out.
Section 13-2 29

30. Electronic Customer Relationship Management Research
A new form of E-CRM, called hosted E-CRM, benefits companies that can not afford to buy expensive software.
hosted E-CRM arrangement where a company signs a contract with a vendor to “rent” E-CRM software on a per-seat basis (usually based on the number of employees)
Section 13-2 30

31. logging customer contacts tracking and managing returns
Electronic Customer Relationship Management Research
Common E-CRM Functions
logging customer contacts
tracking shipments
tracking and managing returns
analyzing trends
Section 13-2 31

32. Transportation
Transportation involves the actual physical movement of products.
Section 13-2 32

33. Transportation Questions to Ask
Which common shipping methods should the company offer?
What are the costs and benefits of each of these options?
Should the company offer additional incentives, such as free shipping or same-day shipping?
Section 13-2 33

34. Types of Carriers Common Shipping Methods U.S. Postal Service (USPS)
United Parcel Service (UPS)
Common
Shipping Methods
Federal Express (FedEx)
Section 13-2 34

35. Types of Carriers
Offering same-day shipping can give a company a competitive advantage, but can also cause customer complaints if deliveries are late.
This dilemma illustrates a time-tested principle of business: underpromise, then overdeliver.
Section 13-2 35

36. Types of Carriers
Amazon.com uses the principle of underpromise, then overdeliver by overestimating shipping times.
Shipments rarely take as long as promised, and customers are usually pleased when shipments arrive sooner than they expect.
Section 13-2 36

37. Types of Carriers
It is important for businesses to send customers at various stages of the shipping process.
Customers feel as though their orders are moving closer toward them, that the company is efficient, and that the company cares about them.
Section 13-2 37

38. Warehousing, Stock Handling, and Inventory Control
Online businesses that deal in material goods still need to store and inventory their products.
An e-commerce business needs a warehousing system that makes it easy to take and fill orders quickly.
Section 13-2 38

39. Efficient Warehouse Organization
Transportation
Efficient Warehouse Organization
Goods that sell quickly should be placed near the dock doors.
Products that are similar to each other should be kept together so they can be located easily.
Section 13-2 39

40. Section Review 1.
How is hosted E-CRM different from E-CRM? What type of company should use hosted E-CRM?
Why is it important for businesses to send customers at various stages of the shipping process?
What does it mean to “underpromise and overdeliver?” How can this make a company look good to customers?
What are some ways a warehouse can be organized efficiently? 2. 3. 4.
Section 13-2 40

41. Customizable Slide 41

42. End of
Back to Table of Contents