Distribution in E-Commerce Back to Table of Contents

Distribution in E-Commerce Distribution in E-Commerce

Back to Table of Contents


Channels of DistributionChannels of Distribution

Physical DistributionPhysical Distribution

2

Distribution in Distribution in E-CommerceE-Commerce

SectionSection 13-1

SectionSection 13-2

Chapter 13


Section 13-1Why 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.

3Section 13-1


Section 13-1 Key Terms

distribution

channel of distribution

intermediary

cybermediary

Web distributor

Web affiliate

aggregator

4Section 13-1


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.

5Section 13-1



The plan for how a product will get from one place to another is often referred to as logistics.

6Section 13-1


7

Logistic Activities

Section 13-1

receiving goods

warehousing

keeping track of inventory

vehicle scheduling and control

distribution of goods



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.

8Section 13-1


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

9Section 13-1


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

10Section 13-1



Direct distribution occurs when goods and services are sold from the producer directly to the customer.

Dell, the computer company, uses direct distribution.

11Section 13-1



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.

12Section 13-1



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

13Section 13-1

Indirect distribution involves one or more intermediaries.



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

14Section 13-1



A cybermediary can be an e-tailer, which sells to the end user.

15Section 13-1



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

16Section 13-1



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

17Section 13-1



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

18Section 13-1

Many Web aggregators deliver information to customers.



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.

19Section 13-1


Section 13-1 Review

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?

1.

2.

3.

4.

Section 13-1 20


Section 13-2Why 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


Section 13-2 Key Terms

electronic customer relationship management

enterprise resource planning

best-of-breed

hosted E-CRM

Section 13-2 22

Order Processing

23Section 13-1

PhysicalDistribution

order processing

transportation

storage stock handling

inventory control


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.

24Section 13-2


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.

25Section 13-2

electronic customer relationship management (E-CRM) software designed to manage and improve communication between a business and its customers electronically



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.

26Section 13-2



As time went on, software vendors adapted existing enterprise resource planning (ERP) software applications to include E-CRM functionality.

27Section 13-2

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



Other software vendors worked to perfect stand-alone E-CRM software and sell it based on a best-of-breed philosophy.

28Section 13-2

best-of-breed when a company focuses on a single product or service to make it the best in its field



Today, best-of-breed and enterprise resource planning software coexist in the marketplace, while stand-alone programs generally have been phased out.

29Section 13-2



A new form of E-CRM, called hosted E-CRM, benefits companies that can not afford to buy expensive software.

30Section 13-2

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)


31Section 13-2

Common E-CRM

Functions

logging customer contacts

tracking shipments

tracking and managing returns

analyzing trends


Transportation

Transportation involves the actual physical movement of products.

32Section 13-2


Transportation

Questions to Ask

33Section 13-2

1. Which common shipping methods should the company offer?

2. What are the costs and benefits of each of these options?

3. Should the company offer additional incentives, such as free shipping or same-day shipping?

34Section 13-2

Common Shipping Methods

U.S. Postal Service(USPS)

United Parcel Service(UPS)

Types of Carriers

Federal Express (FedEx)


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.

35Section 13-2


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.

36Section 13-2


Types of Carriers

It is important for businesses to send customers e-mail 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.

37Section 13-2


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.

38Section 13-2


Transportation

Efficient Warehouse Organization

39Section 13-2

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 Review

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 e-mail 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?

1.

2.

3.

40Section 13-2

4.


41


End ofEnd of

Back to Table of Contents

Documents

Distribution in E-Commerce Back to Table of Contents