Direct distribution

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Direct distribution
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Methods and techniques

Direct distribution – one of the three basic distribution methods, where products (or services) are shipped straight from producer to customer. In other two methods manufactured item or service reaches final client through mediators (wholesalers or/and retailers). Direct channel of distribution is the shortest and the most uncomplicated form of product distribution [1]. P. Szopa and W. Pękała emphasize that "using this kind of channels by producer retain full control over a disposal of products and the level of prices and services to him" [2]. Nowadays, manufactures do not use direct distribution as main distribution channel, because it is very difficult to resign from extensive network, which can be built with a help of mediators [3]. However, internet and new solutions in logistics, such as cross docking, may change the situation in the future.

Types of direct distribution channels

M. Andrejić, V. Todorovich and O. Durden define the following types of direct distribution channels [4][5][6]:

  • Selling through Catalogues or Telesales

Interested customer can place the order via phone, mail or e-mail. Distribution activities in this type of channel can be realized either by manufacturer (especially when product is very specific and unique) or by any logistics company, which specifies on courier services.

  • E-commerce

From manufactures point of view everything looks similar to catalog selling (but Internet platform should be built). F. Kotler emphasize that selling through Internet lets producer easily access global markets. Also, there are no costs of maintaining retail stores, printing catalogues, paying for TV advertisements, etc. [7].

  • Business to Business

Commonly, big batches of industrial products (e.g. wire, gasoline) are sold directly from manufacture to manufacture (customer-manufacture is interested in as low as possible prices and transportation costs; also in the best possible terms).

  • Public Place Sales

Sales can be realized directly at points of production (e.g. farms), through exhibitions events, through auctions (e.g. flower auctions in Holland), etc.

  • Door-to-Door Sales

Door-to-door sales where one of the most popular in distribution of some specific types of goods (e.g. vacuum cleaners), before internet becomes available to anyone. Manufacture employs salespersons, which travel all over the country and try to sell a product directly to a consumer (if product not portable enough, salespersons additionally organize delivery from producer to client’s home after sale).

  • Sales through a Network of Own Stores

Manufacture can create a chain of own shops (or a single store, if producer is small), so that their products can get to the client directly. The disadvantage of this method - need of large investments. In addition, stationary stores will constantly generate costs (staff salary, rent payments, et cetera).

Footnotes

  1. M. Andrejić et al. (2015), p. 75
  2. P. Szopa, W. Pękała (2012), pp. 145-146
  3. O. Durden (2018), Chron.com
  4. M. Andrejić et al (2015), p. 75-76
  5. V. Todorovic et al. (2018), pp. 5-6
  6. O. Durden (2018), Chron.com
  7. P. Kotler et al. (2008), p. 826

References

Author: Pavlo Smereka