Distribution & Distribution Channels

Consider the use of direct and indirect channels of distribution, cost of digital delivery vs. physical delivery, warehousing & transportation.

Whenever a product is tangible like a computer, or intangible like data, is moved between individuals or organizations an exchange has occured. The distribution and marketing channels are what make those exchanges possible on the internet. Distribution and distribution channels are a very important part of the world of online businesses. These channels must be constantly changing in order to keep up with the fast way of life that the consumer has grown accostomed to. The consumerand the business both expect the product to be where it needs to be at a certain time. According to the Encyclopedia of Business and Finance the fastest-growing segment of electronic commerce involves not business-to-consumer, but business to business channels.
A channel of distribution is the path a product takes from producer to consumer. The length and time of the channel of distribution varies from business to business, but the shortest type of distribution is direct path of distribution. A direct channel of distribution is when a producer sells a product directly to the consumer without any intermediaries, or middle man. With the internet, and online shopping, direct distribution has increased because someone buys a product from the producer, and then it is sent straight to the consumer typically by mail, or any other way of transportation. Direct distribution over the internet has made it easy for consumers because they can shop 24 hours a day, and businesses don't have to share the profit with anyone. Direct distribution with the internet however, limits producers from sometimes offering their product to retailers, and warehouses. In indirect channels of distribution there is one or more middleman between a producer and a consumer. Usually the path of a product in indirect channels is manufacturer, retailer, and then consumer, but sometimes include a wholesaler, and manufacturer manager in the mix.
Comment: The sources used here are good sources to find out what the definitions of direct and indirect distribution are. The value of these sources is that it tells you all you need to know about direct and indirect distribution to understand what the concepts mean and how they work. Melony has talked about the advantages of direct distribution but what she didn't talk about was the disadvantages of direct distribution. Generally, when a consumer buys something online they have to pay for the shipping and handling which can get expensive; some online retailers allow consumers to get free shipping once reaching a certain price point or they may give free shipping as a promotional tool. “The most obvious disadvantage is that a direct distribution channel cannot compete with the geographical reach and business volume of a distribution channel that includes major wholesalers and retailers” (What is a Direct Channel of distribution?); this means that certain products are more easily obtained from grocery stores or other retail stores rather than buying the product online. Overall Melony has found two sources that are reliable and define what she was trying to say.

Customer Service

Providing customers with adequate information and [[#|easy website]] navigation increases repeat business. Value added after the sale encourages customer loyalty. How easy are product returns? Can you talk to a person if you have a problem?
Customer service is very important to a business because the customers are what drive a company to greatness. Online businesses must pay particular attention to this aspect of a company because they are not working with the customer face to face. Returning online purchases because it's tricky to do so. When someone returns an item to the physical store it's much easier because they have that face to face component involved. Getting the money back for an item returned online takes a much longer times because the customer has to wait for the item to be shipped back to the retailer.

Returning a product bought online can be tricky depending on when the consumer is trying to return the product. Legally all consumers who buy products online have a seven day cooling off period where they can return the product if it is not what they were looking for or expecting. It isn’t very difficult to return a product within seven days but after the seven days it’s all up to the businesses return policy. Now let’s get into the costs of returning products bought online. Usually the consumer would have to pay the shipping for the product to be sent back to the place of sale; however, some online businesses will pay for the return shipping so that the company has a better chance of having repeat customers. Also when you return products online you don’t get the money back for the original shipping; again, sometimes the business will offer free shipping so if that happened then the consumer would have to worry about wasting money on the original shipping to their address. For consumers who think they may return a product should look at the online businesses return policy to see what they could be getting themselves into. Some online businesses now offer live chat where the consumer can directly talk to a representative through the internet; this is much quicker than emailing and for some people much better than talking on the phone. For most businesses there is phone service that offers live [[#|customer support]] with an actual human representative; some companies even have 24 hour live representatives but that’s only for some companies. The telephone can be a good way to deal with any problems you are having with the business because most of the time they can help you right then and there. Customer service also allows people to track their order online which is very convenient because the consumer can actually see their product going through the shipping system and can have a pretty good estimate on when the product will arrive. Online customer service is actually not that different from in-store customer service.


Customer service is a tricky thing because even though there is assistance willing to help you, it doesn't always mean you are going to get quality service. Returning things online can be a difficult process, and it is frustrating if there isn’t anyone there to assist you. It’s a brilliant idea for businesses to offer 24 hour customer service because it makes their business more convenient. This makes the consumer feel safer and will make them more apt to purchase something from their website because the customer feels as though they have the option of returning it with ease. When there is a limited amount of complications more products will be purchased from that website. That is why customer service is so important. Lastly if a site offers assistance they must make sure that they properly use it to aid the consumer. So if they offer a means of communication through email, then they must be able to keep up with getting back to the consumer, same with calling and so on.

Payment Possibilities

What challenges do businesses face in accepting credit card payments & /or check? What are the business risks? consumer risks? benefits? How does Paypal work? Explore new technology for business and consumer electronic funds transfers such as the Square.

Online purchases cannot be made with cash because the company needs to recieve the money before the product arrives. It is much easier to pay for products with credit cards online because all the customer has to do is put in their information. There are some major risks while purchasing something online. A lot of people fall for scams and accidentally give their information to identity theives.

When using a credit card to purchase something online there is quite a lot of risk involved for both the business and the consumer. The business is entrusted with a substantial amount of personal information, that the consumer has to trust won’t get lost or publicized. The business holds a lot of responsibility when it comes to the privacy of their customer's personal information, therefore if the business does not uphold this responsibility, they risk losing their customers, and risk obtaining an awful reputation, that could cause their businesses to fail. The businesses also risk fraud. They have the potential of receiving false means of payments, or cards that have been over drawn. This seems like a high risk situation but it turns out that the consumer will lose more if their information is easily accessed by outside sources. The consumer risks losing their identity, their credit card numbers, their passcodes, and ultimately a lot of money, that some businesses don't ever pay back. Thankfully there are many resources that protect both the business and the consumer, during an online purchase. When purchasing a product with a credit card, a 4 digit code is required, as a means of insuring that the purchaser using the card is the owner of the card, and not a fraud. Other means of protection include Address Verification System (AVS). This helps better identify the proper owner of the card. As more and more risks are identified, online security is bettering itself for the protection of both businesses and consumers.

Comment: The post above does a good job describing some of the issues that businesses and consumers face while accepting credit card payments. The site used seems to be reliable but the only thing wrong is that the source doesn’t address the benefits that come along with accepting credit cards as a means of payment. The post itself also doesn’t address the benefits which makes credit card purchases seem like its bad; however, the post does tell us that there are ways to protect the consumers and businesses. Overall this is a good post in regards to describing the issues with accepting credit cards as a means of payment.

Samantha's post above does address both the business and consumer challenges of accepting credit card payments online. Along with the responsibility that businesses have to secure consumer's personal information, they have to withdraw from temptation. A lot of the time other companies may want to pay a company for consumer's personal information that way they can advertise directly to the person. With your personal information, they have an idea on what type of products you like to buy based on your buying habits and can target you with similar products. Even though the consumer has some protection it is still easy enough for hackers to discover your personal information. Also if you rely on a safety 4 digit code to protect you from fraud you may not be safe because most identity thieves have been proven to actually be people that you are closest with. Overall, like Samantha has mentioned consumers and businesses need to be ethical, and safe on the internet. The source is valid, and the argument presented is well formulated.

Reference: (Please apply 'user color' to the appropriate corresponding citation)

Oelkers, Dotty Boen. E-commerce. Cincinnati, OH: South-Western/Thomas Learning, 2002. Print.

Truell, Allen D., Lou E. Pelton, and David Strutton. "Channels of Distribution." Encyclopedia of Business and Finance. Ed. Burton S. Kaliski. 2nd ed. Vol. 1. Detroit: Macmillan Reference USA, 2007. 108-112. Gale Virtual Reference Library. Web. 1 May 2013.

"What Is a Direct Channel of Distribution?" Small Business. N.p., n.d. Web. 05 Apr. 2013. http://smallbusiness.chron.com/direct-channel-distribution-42213.html.

Singh, Soumya. "What Are the Indirect Channels of Distribution?" What Are the Indirect Channels of Distribution? N.p., n.d. Web. 05 Apr. 2013. http://www.preservearticles.com/2012022923847/what-are-the-indirect-channels-of-distribution.html.

"Online Customer Service Basics." All Business. Dun & Bradstreet, n.d. Web. 10 Apr. 2013. <http://www.allbusiness.com/sales/customer-service/2653-1.html>.

"Returning Unwanted Items Bought Online Can Be Tricky." - Technorati Business. N.p., n.d. Web. 10 Apr. 2013. <http://technorati.com/business/article/returning-unwanted-items-bought-online-can/>.

"Blog." Paynet Systems. N.p., n.d. Web. 28 Apr. 2013. <http://paynetsystems.com/credit-card-processing/risks-involved-in-e-commerce-credit-card-processing/>.