Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e
- Retailers, Wholesalers
and Their Strategy
Planning
Text © The McGraw−Hill
Companies, 2002Retailers, Wholesalers, and Their Strategy Planning 385A common theme in this chapter—and the two before it—is that channels of
distribution are in the midst of dynamic changes. There have been dramatic
improvements due to more efficient ways to coordinate logistics. The Internet, as
the backbone for e-commerce, is another force for change. But before all of this,
the evolution of retailing and wholesaling was ongoing. Middlemen that find new
and better ways to add value prosper. They find target segments that they serve very
well by differentiating their services and doing something better than producers or
customers can do without them.
It can’t be overemphasized that such changes are ongoing. Clearly, we have just
seen the tip of the iceberg when it comes to the impact that the Internet, and
related technologies that will evolve in the future, will have on Place. There is an
explosion in the number and variety of firms that are trying to figure out how to
have a presence on the Web. Many of them are reshaping competition in the
product-markets in which they compete.
On the other hand, the adoption process that is underway is typical of other
innovations. Much of the initial change has simply been an adjustment to what was
done in the past. The catalog becomes electronic. E-mail supplements toll-free
phone orders. A retailer opens a new website instead of a new store. The technol-
ogy is revolutionary and exciting, but much of what firms are doing with it so far
is evolutionary. In time, revolutionary change will come and bring greater rewards
to the innovators.
Imagine, for example, what it would take for you—and everyone you know—to
do most of your routine shopping on the Internet. What new marketing functions
would be needed, and who would provide them? What would the channel system
look like? What new kind of intermediary will develop and what will it do? Let’s
consider one scenario.
After you surf the Internet and put products in your virtual shopping basket
at one or more websites, what should happen next? Perhaps the seller would start
by assembling your items in a carton with a bar code for your personal name,
address, and account. Then that carton and cartons for all of the other orders
that come into that website would be quickly taken in large economical batches
to an intermediary. The computer-controlled sorting system going into the inter-
mediary’s 5-acre facility would scan each carton’s bar code and route it to the
sorting area for a truck that serves you and each of your neighbors. After a night
of accumulating all the cartons that are directed to you from different sellers, the
intermediary would place the cartons on a delivery vehicle in the right sequence
so they can be efficiently unloaded as the truck passes each customer on its route.
Of course, you’re not home. With money you’ve saved by not running all over
town burning gas you’re off on a vacation; you have time to take off because day
after day you’re not waiting in traffic and checkout lines. Although you’re not
home, you have a special cabinet—with a lock activated by a bar code printed
on the package—mounted to the side of your house where the delivery person
leaves your purchases.^36
This little drama may seem far-fetched today. But it, or something like it, prob-
ably isn’t far off. Specialist-intermediaries will develop to make distribution afteran
Internet purchase more efficient, just as middlemen developed to make distribution
more efficient priorto purchases in retail stores. What is described above isn’t very
different from what UPS does, one package at a time, when it makes deliveries from
manufacturers to retailers. But the cost per package is much higher than it would
be if everybody got deliveries everyday. It’s like the difference between the cost of
a special delivery and regular mail.What Will Happen to Retailers and Wholesalers in the Future?