Direct Selling-Introduction 2

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In Britain these developments arrived much later. The first British retailers were in competition with itinerant pedlars – the first direct sellsers. These ‘chapmen’, as they were called, many of whom regularly travelled from Scotland down into northern England with a wide range of household products, were resented by the growing retail community.

The results, in the seventeenth century, were that some of the earliest local bylaws were introduced, not for consumer protection reasons but to protect local tax-paying retailers from what they considered to be unfair competition. Later, in United States, the Yankee pedlar, the first American direct seller, provided a greatly valued service to isolated communities and they were able to go on doing so until the end of the nineteenth century.

By the mid-nineteenth century most of the goods that we find in today’s superstores were supplied by craftsmen or local manufacturers who dealt directly with their customers. In Victorian Britain virtually every town was-self sufficient in the supply of household products – from chemists who bottled their own potions to the to the ironmongers who made and sold household utensils

As manufacturing methods improved and specialist manufacturers who needed retail stores to sell their goods. Many created demand for their products by national advertising. However, dealing with a growing number of small retail outlets was burdensome and so there also developed a network of wholesalers who specialized in certain products and who were able to satisfy the demands of the small retailers. This was a system of distribution that continued largely unchanged until the 1960s.

The next big revolution in retailing was the emergency of the retail chains and later the superstores who were large enough to deal directly with the manufacturers. A good example of the effect of this retailing revolution is in the hardware industry. In 1970 there were over 100 hardware wholesalers who accounted for 70 per cent of the trade. By 1995 the number had dropped to 30 and their share of the £60 billion trade in hardware and DIY products was no more than 13 per cent. At the same time the number of manufacturers has halved and the number of product lines on offer to the public is a third of what it was twenty-five years ago.

One result of change is that, today, any small manufacturer or supplier, with an alternative brand or even a new product, faces a huge problem, in getting it to the market. The m ajor retailers are constantly striving to improve their stock turns and reduce the number of product lines they carry. The result is that multiple retail stores are getting more and more restrictive in the number of suppliers with whom they are prepared to do business.

Unless a supplier can guarantee an annual sales volume of at least £250 000 for any one product, and unless they are prepared to support the product with national advertising, then their chances of getting it onto the shelves of a major superstore are slim. This is just one trend that has given a new impetus to direct selling.

As the retail industry has developed over the past twenty -five years, there is another weakness in their system that has been readily exploited by direct selling organizations (DSOs). Incidentially, DSO is a acronym that I have borrowed from Dick Bartlett, the Vice Chairman of Mary Kay Copsmetics Inc. and the author of an excellent book on direct selling – The Direct Option (Bartlett, 1994) and which I shall use hereafter.)

This weakness is the ability to maintain close contact with their customersand to repond quickly to any changes in demand. Any manufacturer would like, if it were possible, to deal directly with their ultimate consumers. For most TMCG manufacturers it is, until recently, simply impractical for them to do so.
Reference: Direct Selling: Richard Berry-Read More…