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BTEC BUSINESS LEVEL UNIT 29 UNDERSTANDING RETAILING P2,M2,D1
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BTEC BUSINESS LEVEL UNIT 29 UNDERSTANDING RETAILING P2,M2,D1
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Unit 29 – understanding RetailExplain the movement of goods from manufacturer, retailer
to consumer
Distribution means to spread the product throughout the
marketplace such that a large number of people can buy it.
Distribution involves a good transport system to take the goods into
diferent geographical areas and a good tracking system so that the
right goods reach at the right time in the right quantity. In addition
to this a good packaging which takes the wear and tear of transport
and lastly tracking the place where the product can be placed.
Distribution must be done profciently and efectively. For example,
perishable goods such as fresh fruits must be distributed to retailers
and consumers immediately after production as their shelf life. This
contrasts with a product as such as shoe, which does not have to be
distributed as quickly or rapidly.
Distribution channel for retail
Distribution channel is a network through which products move from
producer or manufacturers to consumers or users. The channel
comprises of producers, consumers, selling agents and retailers
these are known as intermediaries.
The frst channel shows the producer, the wholesaler, the retailer
and the consumer. The wholesaler typically buys and stores large
quantities of several producers’ goods and then breaks into bulk
deliveries to supply retailers with smaller quantities. For example,
Costco is a wholesaler and the store their products in a warehouse
behind the shop. The signifcant thing about Costco is that
customers can shop in the warehouse. This is a smart thing Costco
has done because they do not have to buy a separate warehouse to
store products.
The second channel contains one intermediary. This is because the
producer sells the product straight to the retailer. Companies such
as Sony, Panasonic, Canon etc., sells their goods straight to large
retailers such as Comet, Tesco and Amazon, which then sells onto
the fnal consumers. In order for Tesco to sell the product to the
costumers, they will need to store the products in a huge storage
space. Ideally, because Tesco have
and own their own brand, they are
likely to have their own storage
space.
,Unit 29 – understanding Retail
The last channel is called “direct – marketing” channel since there is
no intermediary levels and the manufacturer sells directly to
customers. An example of this would be holiday companies.
Other intermediaries are considered such as agents. Agents are
usually independent businesses that source goods for retailers,
producers and wholesalers from international business. For example,
LUSH has to ensure that the wholesaler has the products they need
in order for them to sell. In terms of storage, LUSH can easily store
their bulks in a small storage because they can buy what they need
weekly from a wholesaler.
Most manufacturers choose to sell their goods to a wholesaler who
will then distribute the products in order to reach a larger number of
consumers. In this case, the wholesaler becomes an intermediary
between the manufacturer and the retailer. Wholesalers buy goods
in bulks and then split them into smaller quantities in order to sell
the products on to the retailers. In addition to this, some wholesalers
ofer further services such as packing, labelling and delivery as well
as supplying promotional material. Once the wholesaler purchases
the products there are three main ways that it will reach the
consumer, either they sell the products directly to the customer, or
through intermediaries such as retailers or agents.
For products to get to the consumer, it must go through some
stages this is known as movement of goods. Wholesalers range from
cash and carry outlets, which ofer minimal service to full function
wholesalers which have services such as credit delivery and sales
and technical advice. Agents obtain orders for manufacturers,
retailers and wholesalers but they are not employed by the
organisation.
Transportation
Transportation is vital step in distribution because this is what
ultimately will make businesses money. Retailers that sales furniture
or electrical products such as DFS, Ikea or Tesco will need to ofer a
delivery service. Goods that have been produced in the European
Union (EU) or that have been imported into an EU country with duty
paid are in free circulation within the EU. Customs duty is not
payable on acquisition (imports or purchases) of goods that are in
free circulation. The UK and many countries within Europe have well
developed road and rail infrastructures ofering highly efcient and
cost efective methods of transport therefore roads and rail and the
two most popular ways of transport to move goods. Goods can be
, Unit 29 – understanding Retail
transported by using aeroplane however, they are higher risks that
comes with that.
Moving goods by rail as popular for hundreds of years. The freight
rail network is highly developed in the UK. However, it is important
that companies think about the entire journey that the goods take to
ensure it is efcient enough for the goods to arrive on time.
Companies needs to think thoroughly about each step of the journey
and the risk assessment of any occurrence that is likely to happen.
Transportation of goods, once in mainland Europe, could take some
time and involve trans-shipment to a variety of diferent rail
operators. It is better to ship large quantities of goods in one single
shipment in order to be cost efective.
By road is the most popular method of transporting goods as it is
efcient and the cheapest. There is a wide range of vehicle types
available, so companies can design a transport system around their
products. Consideration must be given to the type of goods being
transported as they can always be risks and companies have to be
prepared. For example, it is raining and the transportation that is
being carried is fragile, there is a way the driver has to manoeuvre
for the goods to reach its destination safer. Assessment of the road
network in both UK and mainland Europe should determine whether
the infrastructure is of high enough quality to ensure that the
products arrive on time and in good condition.
Transportation by air is the fastest option and it allows retailers to
hold smaller stock levels. However, the cost for most products tends
to be very expensive and this means of transport might be best for
emergency stock or to meet a deadline such as Christmas. This is
efcient for companies such as Tesco because that tend to have a
lot of stock around Christmas time and they sell out rapidly. Using
air to transport their goods its efective as they can aford to pay for
it as they are making 1.3% sales revenue every Christmas. However,
problems can also occur with delays at airports, as goods have to be
loaded and unloaded. These problems are unpredictable and can
happen at any time and there is nothing companies can do about
them. The will afect companies because if their stocks are not
transported they cannot make money and as a result of that, they
will be losing out on proft.
Water is slow but the most economical method of transportation.
Transportation by water does not cause as much harm to the other
methods however delays may occur while waiting sailing conditions
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