Introduction
A clothing retailer needs to ensure that the products reach the final consumer in good condition, in good time and at minimal cost. When e-retailing is involved, the need for efficient distribution continues. The retailer has to consider the optimal ways in which to achieve this.
In terms of channel, the retailer has several options:
- Developing and using an entirely separate channel
- Using existing channels or
- Merging the first two, that is, integrating existing channels with newly established ones.
Operating an entirely separate channel
There are various reasons for and against using a separate distribution channel for e-retailing. Some of reasons are:
Advantages of using an entirely separate channel
Location
Consumers, especially those involved in e-commerce, are often at different locations. A need arise for the retailer to switch the use of channel resources effectively from one consumer to another. A separate distribution channel achieves this goal without interrupting the already established channel.
Application of modern technology
Operating a separate distribution channel enables the retailer to have a computer system that facilitates transactions with the supplier as well as the customer. This greatly improves efficiency and leads to specialization which has inherent advantages.
Reduction of operating costs
This comes as a result of the elimination or reduction of the need for storage. With a separate channel the retailer can arrange for the product to be sent directly to the consumer. This is especially possible with clothing retail business since the product does not require further branding.
Maintaining current channel
Use of a separate channel enables the retailer to continue working efficiently with existing channels without having to consider and deal with the complexities that come with integrating a new system onto an existing one.
Disadvantages
Uncertainty in demand
While establishing a separate channel may be economical when the demand for the product is high, it may become quite uneconomical otherwise.
Increased competition which is a result of e-retailing makes the effects of fluctuation of prices felt more.
Low brand loyalty
E-retailing channels have made the consumer less loyal to particular brands. Loyalty is sometimes created by physical contact between the consumer and retailer, and also touching the product before purchase. The new channel eliminates this.
Operation costs
Establishing a new system involves hiring new employees or assigning new duties to current ones. This will raise the cost of operation unlike when existing channels are used.
Evolution of new technologies
A new channel may be established based on technology that is currently in the market, however newer and more cost effective technologies are invented at a rapid rate. The new channel may be rendered obsolete.
Use of an Integrated Approach
As has been seen from the preceding discussion, whereas having a separate channel is advantageous, it also has disadvantages which can not be ignored. The best approach therefore in my view is for a retailer to operate in such a way as to enjoy the benefits of a separate channel as well as those of the existing one. This is best achieved by using an integrated approach whereby based on sound considerations, a new channel is established but works closely with the existing one. The new channel serves to complement the existing one and not to compete it. Integrating keeps brand loyalty. An integrated approach may be complex.
Next
Clothe retailer “next” can overcome e-retailing distribution channel problems by having an integrated channel where the existing channel is complemented by another e-retail channel. In this way they can maintain consumer confidence in there product and still reach a wide range of customers. Existing channels maintain loyalty to brands sold by Next.
Bibliography
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Media.wiley.com (2009).The Retail Distribution Channel. Web.