Substantial Changes in Channel of Distribution
Rao (1999) states that distributors and channels of distribution has existed for a long period of time as these channels are used to get products to customers in convenient, faster, cheaper, and more effective manner. Given the significance of distribution in getting products to customers, businesses or companies in every industry are increasingly looking for suitable channels of distribution. Effective, cheaper, and faster distribution of products to customers is considered critical toward the successful and profitable operations of any business/company. Consequently, different industries continue to experience changes in their channels of distribution as means for enhancing efficiency and profitability. These substantial changes are influenced by various factors, but focus on enhancing efficiency and profitability.
The retail industry is one of the industries that has experienced substantial changes in the channels of distribution. These substantial changes in the channels of distribution in the retail industry are evident in the emergence of electronic retailing (Krafft & Mantrala, 2011). Electronic retailing dominates the retail industry in the new millennium and has acted as a significant change in the distribution channels in this industry. Traditionally, retailers would distribute their products through specific distributors and locations and customers would need to visit these distributors and physical locations to get their products. However, the rapid technological advancements have changed how businesses in the retail industry get their products to customers. Some of the fundamental reasons for the substantial changes in channels of distribution in the retail industry include…
Technology
Technological advancements have resulted in the emergence of the concept of online retailing that has changed approaches to distribution processes. The advancements have enabled retailers to easily gather, group or classify, and retrieve large volumes of information in a short period of time (Rao, 1999). Online retailing makes it easy for customers to select a product and purchase it electronically and await its delivery at their doorstep.
Consumer Behavior
Consumer behavior has influenced substantial changes in the channels of distribution in the retail industry through increased interest in the shopping experience (Krafft & Mantrala, 2011). In today’s information era, customers have become more knowledgeable about products and services and are increasingly looking for enhanced shopping experience. As a result, businesses in the retail industry have changed their approach to distribution in attempts to provide customers better shopping experience.
Competition
The retail industry is characterized by improvements in retail sales and increased competition in the global retail marketplace. Emerging retailers have capitalized on changes in business environment to enhance their competition against dominant retailers. Therefore, providing greater value to customers than rivals has become critical toward the success of companies in this sector (Krafft & Mantrala, 2011). Companies have adopted changes in their distribution channels as part of gaining competitive advantages over their rivals and providing greater value and a better shopping experience to their customers.
Most Significant Fundamental Reason
However, the most significant fundamental reason for the substantial changes in the channel of distribution in the retail industry is technology. Technology has not only shaped how companies in this industry carry out their activities, but has contributed to the emergence of the concept of electronic/online retailing. Technological developments have become the basis through which companies can meet the other reasons for substantial changes in the retail industry’s channels of distribution. The significant role technology plays in changes in the distribution processes is evidenced in its contribution to multi-channel retailing. Businesses in the retail industry are integrating technology to help support their multichannel distribution strategies and processes. State-of-the-art, cutting edge technology has become the premise for distribution strategies and processes in the retailing industry.
References
Krafft, M. & Mantrala, M.K. (2011). Retailing in the 21st Century: Current and future trends (2nd ed.). New York, NY: Springer.
Rao, B. (1999). The Internet and the Revolution in Distribution: A Cross-Industry Examination. Technology in Society, 21, 287-306.
