Distribution Decisions

Importance of Distribution Channels

As noted, distribution channels often require the assistance of others in order for the marketer to reach its target market.  But why exactly does a company need others to help with the distribution of their product? Wouldn’t a company that handles its own distribution functions be in a better position to exercise control over product sales and potentially earn higher profits? Also, doesn’t the Internet make it much easier to distribute products thus lessening the need for others to be involved in selling a company’s product?

While on the surface it may seem to make sense for a company to operate its own distribution channel (i.e., handling all aspects of distribution) there are many factors preventing companies from doing so.  While companies can do without the assistance of certain channel members, for many marketers some level of channel partnership is needed.  For example, marketers who are successful without utilizing resellers to sell their product (e.g., Dell Computers sells mostly through the Internet and not in retail stores) may still need assistance with certain parts of the distribution process (e.g., Dell uses parcel post shippers such as FedEx and UPS).  In Dell’s case creating their own transportation system makes little sense given how large such a system would need to be in order to service Dell’s customer base.  Thus, by using shipping companies Dell is taking advantage of the benefits these services offer to Dell and to Dell’s customers.