Direct Selling – Introduction-3

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The result is that they are forced to trade logistical and account management benefits against the problems of being insulated from the consumer by a powerful and independent distribution network. DSOs, by comparison, know within a matter of days which of their products are selling best and in what volume.

Manufacturers with their own retail store chains, and those who supply the major food retailers, get an equally prompt feed back, but for others, particularly those marketing seasonal lines, responding to changes in demand can be a major problem. Some resort to ingenious solutions. Black & Decker is a good example.

Black & Decker found, some years ago, that an analysis of the guarantee cards they had received each week from retail customers gave a good picture of the mix and change in volume of products sold in the high street a few days earlier. Although only a small proportion of customers fill in guarantee cards, it was statistically useful information in planning production programmes. The point is that it was received earlier than the reorder schedules that came,in due course, from their retail customers and wholesalers.

The information a DSO receives, from the orders of its salespeople, is based not on sales expectations but on current sales demand. It is invaluable in forecasting and maintaining efficient inventory levels. Direct selling is not the only distribution channel through which a manufacturer or supplier deals directly with its customers. Mail order and direct marketing archive the same result – with many of the the same benefits. Direct selling is, however, growing faster.

In the future there may be another serious contender and that is TV home shopping and the Internet. However, at present, the business achieved by QVC and others and through electronic sales is still quite small. Early indications are that the available market may be restricted to a narrow section of the consuming, public but this is a matter of debate.

Channelsales (£m)5-year growth (%)Home shopping marketshare %
Agency mail order

430058.9
Other mail order catalogue99813.7
All mail order catalogues529824.772.5
Direct response, mail shots and ads95013.213.1
TV and electronic420.6
Direct Selling96754.113.2
Total7257100.0

Table 1.1 is a comparison for 1995 of the way in which the £7.3 billion, home shopping market was divided between the five prominent channels.
Reference: Direct Selling: Richard Berry-Read More…..

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