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The Net As A Channel of Distribution

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Virtual Malls. Host multiple online merchants in a model similar to a shopping mall. Hosted merchants gain exposure from traffic coming to the mall. Six benefits: ... – PowerPoint PPT presentation

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Title: The Net As A Channel of Distribution


1
Chapter 12
  • The Net As A Channel of Distribution

2
The Net as a Distribution Channel
  • A group of independent firms that work together
    to transfer product and information from the
    supplier and the customer.
  • Producers, Intermediaries, and Customers

3
Types of Intermediaries
  • Wholesalers- buy product from the manufacturer
    and then resell it to retailers.
  • E-tailers- buy product from the wholesaler and
    then sell it directly to consumer.
  • Brokers- facilitate transactions between buyers
    and sellers, called market makers.
  • Agents- Manufacturing or Purchasing agents
    depending on who they are working for.

4
Functions of Distribution Channels
  • Transactional
  • Making contact with buyers
  • Using communication strategies to make them aware
    of products.
  • Matching products to buyers needs
  • Negotiating prices
  • Processing transactions

5
Functions of Distribution Channels
  • Logistical
  • The physical distribution
  • Aggregating products
  • Third-Party logistics
  • Last mile problem

6
Functions of Distribution Channels
  • Facilitating Functions
  • Include marketing research about buyers
  • Financing of purchases

7
  • The system Perspective
  • Flow of products, information and finance
  • Supply Chain Management-The coordination of flows
    of material, information, and finances.

8
Length Of Distribution Channel
  • Disintermediation process of eliminating
    traditional intermediaries
  • Internet disintermediation can fail
  • 1. U.S. Have most efficient distribution system
    in the world
  • 2. Intermediaries allow corporation to maintain
    focus on their core business
  • 3. Traditional intermediary simply replaced with
    their internet equivalent

9
E-business Models
  • Online intermediaries are classified by the way
    they make money
  • Content sponsorship
  • Direct selling
  • Infomediary
  • Intermediary model

10
Content Sponsorship E-Business Model
  • Firms create web sites, attract a lot of
    traffic, and sell advertising.
  • Involves using a niche strategy to draw special
    interest audiences
  • The product sold is a space on the Web.
  • Similar to traditional media, where television,
    magazines, and other media sell space and air
    time.

11
Direct Selling E-Business Model
  • Manufactures sell directly to customers instead
    of using intermediaries.
  • Wholesalers and retailers are not needed causing
    disintermediation.
  • The Internet makes it easier to bypass
    intermediaries.
  • Used in business to business markets-saves
    millions of dollars at times in sales related
    expenses such as personnel, product
    configuration, and order processing costs.

12
Direct Selling Considerations
  • Perishable products, such as fresh foods and
    flowers are sold using this method.
  • Benefits include cost savings and rapid delivery
    for the consumer.

13
Infomediary E-Business Model
  • Refers to an online organization that gathers and
    distributes information
  • Others like DoubleClick use cookies to track
    users as they surf the web without compensation

14
Brokerage Models
  • The broker creates a market in which buyers
    and sellers negotiate and complete transactions.
    They typically charge a fee.

15
Brokerage Model Considerations
  • Benefits to the Buyer
  • Convenience
  • Speed of order execution
  • Transaction processing
  • Cost savings through Lower prices
  • Decreased search time
  • Savings of energy and frustration in
    locating appropriate sellers.

16
Agent E-Business Models
  • Agents do represent either the buyer or seller
    depending on who pays their fees.
  • Manufacturers Agent
  • Represent more than one seller.
  • Metamediary
  • An agent that represents a cluster of
    manufactures, e-tailers and content providers
    organized around a life event or major asset
    purchase.

17
Benefits of Metamediaries
  • They solve four major consumer problems
  • Reduce search times
  • Provide quality assurance about vendors
  • Facilitate transactions for a group of related
    purchases.
  • Provide relevant and unbiased content information
    about the purchase.
  • They benefit business partners by
  • Having traffic directed to their sites
  • Co-branding with the metamediary

18
Virtual Malls
  • Host multiple online merchants in a model
    similar to a shopping mall. Hosted merchants gain
    exposure from traffic coming to the mall.
  • Six benefits
  • Branding
  • Digital wallets
  • Frequent shopper programs
  • Gift registry
  • Search facility
  • Recommendation service

19
Agent Models Representing Buyers
  • Shopping Agent
  • Second generation shopping agents
  • Reverse Auction

20
Agent Models Representing Buyer Examples
  • Buyer Cooperative
  • E-Tailing
  • Use of bit vendors

21
Does Online Commerce Work?
  • Online retailing
  • What are people buying?
  • B2B
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