Channels of distribution

Distribution Channels

Marketing Distribution Channels

The retail behemoth Wal-Mart has been called the template for 21st century capitalism. In an article entitled, "Wal-Mart: Template for 21st Century Capitalism," author Corwin Pavilion notes "Wal-Mart is noted for its low-price, low-wage, globally-sourced business model, a strategy that has achieved precision control of manufacturing, inventory, and distribution by taking full advantage of the world's new telecommunications infrastructure." Traditionally, distribution issues come into play heavily in deciding a corporation's specific, rather than general branding strategy. "In order to secure a more exclusive brand label, for example, it is usually necessary to sacrifice volume," while "some firms can be very profitable going for quantity where economies of scale come into play." (Consumer Psychologist, 2004)

Along the lines of this traditional model it is true that Wal-Mart's success partly rests on its maximization of the phenomena of high-volume sales. However, rather than focusing on a specific product or even a fixed image for it store it has instead attempted to maximize its retailing reach purely by developing "responsive marketing programs" to maximize at every single step of the distribution chain "the channel's end-market impact and efficiency." (Retail Forward, 2004)

In other words, Wal-Mart begins by selecting what products it can sell cheaply, and manufacture them, or select products that are manufactured in, low-cost countries. Then, it deploys these products, which encompass a large range of clothes and toys as well as durable goods, in great volume to the industrialized world. At its stores, Wal-Mart mainly uses part-time workers with few benefits to keep costs down on the sales floor and in the stocking room, in the last sphere of the retailing distribution chain. Thus, from the initial inexpensive product manufacturing of its products, to its large volume of products offered and selected, to its inexpensive sales force, Wal-Mart is consistently able to offer its consumers the lowest prices with convenient one-stop shopping, on almost all of its products, without requiring its consumers to frequently scan advertisements and clip coupons to find the best deals.

Thus, according to Pavilion, "by responding to the needs of the moment and anticipating shifts in the market, Wal-Mart perfectly embodies the process of 'creative destruction.'" Joseph Schumpeter as "the engine by which one mode of capitalist production and distribution is replaced by another" initially defined this principle. Wal-Mart has destroyed the idea that to buy music, one goes to a store that sells primarily music, like Sam Goody, or that to buy a lawn mower one goes to a manufacturer, or to the local hardware store -- or even, perhaps, Home Depot, another large store that still caters to a specific kind of product and customer. Wal-Mart literally has something to please and amuse everyone in the family, and at the right cost, and in the same place.