The chain of distribution

Companies must have ways to get their goods to the buyers. This is called distribution. There are three main ways to distribute the product.

Direct Sales: A manufacturer sells its product directly to the customer. Usually a company will have salespeople who make a commission on the amount they sell. The more the salespeople sell the more money they make. The commission is an incentive for them to sell more products. If an area is large and the company does not have enough salespeople, they might hire a sales representative to sell their product.

Wholesale Sales: Wholesalers are people or companies that buy large quantities of products from manufacturers. Then they sell the products to other businesses in large quantities.

Retail Sales: Retailers buy products either from wholesalers or directly from the manufacturer. Then they sell them to consumers. In a shopping mall we can see a lot of retail stores from discount stores to large department stores.

Normally the manufacturer sells his products to the wholesaler, the wholesaler sells to the retailer, and the retailer sells to the consumer or end-user. However, depending on the type of product, one or more stages may be missed out.

b) How do you think the following goods are distributed? There may be more than one answer.

Ready-made clothes, designer clothes, hand-made chocolates, flowers, stationery.

Exercise 59 Choose one or more of the following products and describe (in as much detail as possible) the process it undergoes from the time the natural resources are extracted to the time it reaches the consumer:bread,paper,leathershoes,wooden chairs,copper pipes. Mention the three stages of industry and the chain of distribution.

Exercise 60 Read the text below about German electronics wholesaler and his problems with time. Match the words initalicsin the text to their definitions (1-6).

1 time from the customer’s order to delivery

2 when something is late

3 arrival of goods at a person’s or company’s address

4 sending products from the factory

5 all the stages leading to a result

6 the latest time for completing a task

Getting out products to our customers is a long and difficult process. Our main problem is time. Customers order our printers and then we have to arrange delivery to their offices. The problem is that we make the printers in the UK and it can take a long time for our factory to dispatch the printers to our customers in Germany. This can take a long time. Sometimes we miss deadlines: we say we want the printers with the customer in two weeks, but they often get them four weeks later! There are many reasons for the delays: the factory is too busy, problems with the paperwork, etc. To be successful, we need to keep our lead time short – it shouldn’t take longer than two weeks from the customer’s order to the moment the printer arrives at their office.