Why Pay More When You Can Pay Less – Direct Selling Vs Retail Sales
The aim of this article is to expain why retails distribution and traditional product distribution are rapidly being replaced by direct sales and intellectual distribution.
Firstly, let me explain what I mean by retail selling and traditional distribution: In traditional distribution, manufactured products are distributed to wholesales. The wholesalers then sell those products to retailers and the retailers sell the products to the consumer at a significantly greater cost than than the manufactures sold them for. Retailers have no choice other than to charge more, as they have to pay for advertising, salaries, lighting, etc. and those costs must be covered by the customers if they are to make money.
Intellectual distribution is the ability to provide product and service information to the potential customer, who then orders from the manufacturer (direct sales).
Have you ever been into a shop to enquire about product prices, only to return home and identify the product far cheaper Online? The product you are ordering is exactly the same, but Online you may be receiving it directly from the wholesaler or even the manufacturer. The Internet has revolutionised the way companies promote and educate us about their products and the costs to the customer are greatly lessened as a result.
What does this mean for retail distribution? Can you see why many retailers and stores are going out of business? Is this situation likely to continue?
It is my belief that it is the older generations who are be less skilled using the Internet, keeping retail from disaster. Imagine what will transpire when the majority of the population are online and ordering directly from the manufacturers. Many people do food shopping on the internet, Christmas shopping online, we buy books, cds and dvds on the internet! Is there any limit to the products that we can purchase directly from wholesalers or manufacturers?
The reality is that retail distribution is suffering and direct sales is booming. This may be a very bad thing for retail outlets (look what happened to Woolworths in the UK!), but a great thing for direct sales companies (i.e. Amazon).
As individuals we can capitalise on these economic trends. Firstly, we can order goods from direct sales companies. Also, we may be able to align with a direct sales company, promoting the products and services they offer. You can be an independent agent and earn commissions from any sales you generate. This is ideally suited for the Internet and is definitely something worth considering in today’s economy!