Distribution in
E-Commerce
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Chapter 13
Distribution in
E-Commerce
Section
Section
13-1
Channels of Distribution
13-2
Distribution in
Physical Distribution
E-Commerce
2
Distribution in E-Commerce
Section 13-1
Why 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.
Section 13-1
3
Distribution in E-Commerce
Section 13-1
Key Terms
distribution
channel of distribution
intermediary
cybermediary
Section 13-1
Web distributor
Web affiliate
aggregator
4
Distribution in E-Commerce
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.
Section 13-1
5
Distribution in E-Commerce
Foundations of
Distribution
The plan for how a product will get from one place
to another is often referred to as logistics.
Section 13-1
6
Foundations of Distribution
Logistic Activities
receiving goods
warehousing
keeping track of inventory
vehicle scheduling and control
distribution of goods
Section 13-1
7
Distribution in E-Commerce
Foundations of
Distribution
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.
Section 13-1
8
Distribution in E-Commerce
How Distribution Works
Businesses that are unable
to provide quality
distribution will lose
customers.
Section 13-1
distribution the way the
producer or manufacturer
delivers products,
services, or information to
the consumer
9
Distribution in E-Commerce
Channels of Distribution
Producers use a specific
channel of distribution to
move goods to the end user.
Section 13-1
channel of distribution
the path a product takes
from producer or
manufacturer to consumer
10
Distribution in E-Commerce
Channels of Distribution
Direct distribution occurs when goods and
services are sold from the producer directly to the
customer.
Dell, the computer company, uses direct
distribution.
Section 13-1
11
Distribution in E-Commerce
Channels of Distribution
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.
Section 13-1
12
Distribution in E-Commerce
Channels of Distribution
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
Indirect distribution involves
one or more intermediaries.
Section 13-1
13
Distribution in E-Commerce
Channels of Distribution
An e-commerce
intermediary is called a
cybermediary.
Section 13-1
cybermediary an
Internet channel of
distribution that helps
move products from the
manufacturer to the
consumer or industrial
user
14
Distribution in E-Commerce
Channels of Distribution
A cybermediary can be an e-tailer, which sells
to the end user.
Section 13-1
15
Distribution in E-Commerce
Channels of Distribution
A Web distributor is
another type of
cybermediary.
Section 13-1
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
16
Distribution in E-Commerce
Channels of Distribution
A Web affiliate is a
cybermediary that makes
money by referring
customers to e-commerce
Web sites.
Section 13-1
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
17
Distribution in E-Commerce
Channels of Distribution
An aggregator is another
type of cybermediary.
Many Web aggregators
deliver information to
customers.
Section 13-1
aggregator a company
that offers for distribution
a number of products and
services from a variety of
manufacturers and
producers
18
Distribution in E-Commerce
Channels of Distribution
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.
Section 13-1
19
Distribution in E-Commerce
Section 13-1
Review
1.
What is a channel of distribution? How does direct distribution
differ from indirect distribution?
2.
What does a cybermediary do? Is a wholesaler a
cybermediary?
3.
What are logistics as they apply to distribution? What are
some logistic activities?
4.
What is a Web affiliate? How can a Web affiliate be helpful to
an online business?
Section 13-1
20
Distribution in E-Commerce
Section 13-2
Why 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
Distribution in E-Commerce
Section 13-2
Key Terms
electronic customer
relationship management
enterprise resource
planning
Section 13-2
best-of-breed
hosted E-CRM
22
Order Processing
order
processing
storage
transportation
Physical
Distribution
stock handling
inventory
control
Section 13-1
23
Distribution in E-Commerce
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.
Section 13-2
24
Distribution in E-Commerce
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.
Section 13-2
electronic customer
relationship
management (E-CRM)
software designed to
manage and improve
communication between
a business and its
customers electronically
25
Distribution in E-Commerce
Electronic Customer Relationship
Management Research
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.
Section 13-2
26
Distribution in E-Commerce
Electronic Customer Relationship
Management Research
As time went on, software
vendors adapted existing
enterprise resource
planning (ERP) software
applications to include
E-CRM functionality.
Section 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
27
Distribution in E-Commerce
Electronic Customer Relationship
Management Research
Other software vendors
worked to perfect standalone E-CRM software and
sell it based on a best-ofbreed philosophy.
Section 13-2
best-of-breed when a
company focuses on a
single product or service
to make it the best in its
field
28
Distribution in E-Commerce
Electronic Customer Relationship
Management Research
Today, best-of-breed and enterprise resource
planning software coexist in the marketplace,
while stand-alone programs generally have
been phased out.
Section 13-2
29
Distribution in E-Commerce
Electronic Customer Relationship
Management Research
A new form of E-CRM,
called hosted E-CRM,
benefits companies that
can not afford to buy
expensive software.
Section 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)
30
Electronic Customer Relationship
Management Research
logging
customer contacts
tracking
shipments
Common
E-CRM
Functions
tracking and
managing returns
Section 13-2
analyzing
trends
31
Distribution in E-Commerce
Transportation
Transportation involves the actual physical
movement of products.
Section 13-2
32
Distribution in E-Commerce
Transportation
Questions to Ask
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 sameday shipping?
Section 13-2
33
Types of Carriers
U.S. Postal Service
(USPS)
United Parcel Service
(UPS)
Common
Shipping Methods
Federal Express
(FedEx)
Section 13-2
34
Distribution in E-Commerce
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.
Section 13-2
35
Distribution in E-Commerce
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.
Section 13-2
36
Distribution in E-Commerce
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.
Section 13-2
37
Distribution in E-Commerce
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.
Section 13-2
38
Distribution in E-Commerce
Transportation
Efficient Warehouse Organization
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
39
Distribution in E-Commerce
Section 13-2
Review
1.
How is hosted E-CRM different from E-CRM? What type of
company should use hosted E-CRM?
2.
Why is it important for businesses to send customers e-mail at
various stages of the shipping process?
3.
What does it mean to “underpromise and overdeliver?” How can
this make a company look good to customers?
4.
What are some ways a warehouse can be organized efficiently?
Section 13-2
40
Distribution in E-Commerce
41
End of
Distribution in
E-Commerce
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