1. Channels of Distribution

2. Cotton
On a sheet of paper, list all the steps/processes a bole of cotton must go through before becoming a t-shirt.
How many steps are there?

3. A new channel of distribution begins when the product changes form.
Looking at the processes which the cotton must go through, how many different paths or channels of distribution are there?

4. Direct vs. Indirect Distribution
Direct distribution occurs when the goods or services are sold from the producer DIRECTLY to the final customer.
Indirect distribution involves one or more intermediaries.

5. Intermediaries
Moves the product for the manufacturer or producer to the final user.
Two types of intermediaries:
Merchant intermediaries : Take possession and/or title to the product.
Agent intermediaries: Do not take possession or title to the product.

6. Types of Intermediaries
Wholesalers
Retailers
Agents

7. Wholesalers
Buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses.
Are also called distributors
Take title or possession of the goods they buy for resale

8. Specialized Wholesalers
Rack Jobbers
Manage inventory and merchandising for retailers
Count stock
Filling stock when needed
Maintain store displays
Compact discs, hosiery, health products, beauty products
Corporate Examples: Coke, Pepsi, Hallmark & Ambassador cards, Frito Lay

9. Drop Shippers
Own the goods they sell but do not physically handle the actual products.
Sell the goods to other businesses and have the producer ship the merchandise directly to the buyers.
The products are owned, but never handled by the drop shipper.
Deal in large quantities of items in bulk, such as coal, lumber, and chemicals that require special handling.

10. Retailers
Sell goods to the final user for personal use.

11. Types of Retailers Brick & mortar retailers
Sell goods to the customer from their own physical stores.
Examples include: J Crew, Hollister, American Eagle, Abercrombie & Fitch
Automatic Retailing (Vending Services)
Direct Mail
Catalog Retailing
Home Shopping Networks

12. E-Tailing vs. E-Marketplace
An individual store (retailer) selling their products on the internet using their own website.
E-Marketplace
Selling of common goods or services via the internet
Search for airline tickets and it will give you results for American, Delta, Southwest, & other airlines.

13. Storage Holding goods until they are sold and shipped.
Private Warehouse
Public Warehouse
Distribution Center
Bonded Warehouse

14. Private Warehouse
A facility designed to meet the specific needs of its owners.
Used only by that business and for that business
Coca-Cola
Wal-Mart

15. Public Warehouse
Offers storage and handling facilities to individuals or companies.
Available to anyone
Examples:
Bear Creek Storage
POD’s

16. Distribution Center
A warehouse designed to speed the delivery of goods and to minimize storage cost.
Products only move THROUGH a distribution center but are NOT stored there
JCP receives a truckload of shoes from Nike
Trainload of shoes brought into Dist. Ctr.
Loaded onto conveyors in the dist ctr and sorted by are to which they will be delivered
Trucks are loaded then sent to various JCP stores

17. Bonded Warehouses
Store products that require the payment of a federal tax.
Products cannot be removed from the bonded warehouse until the tax has been paid.
Businesses save money because they only take the goods out of storage as they are needed.