Digitalwall: Stop Internet Marketing (3) All Determination; No Distribution

Less distribution cost, shorter distance to consumers, larger sales can't be wrong.

The Internet has long been considered a type of media, hence the preponderance of discourse and discussion of Internet advertising and paid content that one can find using any search engine. However, few eCommerce enthusiasts can provide a straight/convincing story of how the Internet should co-exist with its alter ego of a distribution channel.

As has been previously discussed, marketing without a solid planning of distribution, is like a puzzle with an unbearable number of missing pieces at best. We, however, can hardly blame people in the past for not doing a better job at this, since that was a time when eCommerce was characterized by many individual yet separate points of operations without any industrial value chain to hold them together. That was a time when the Internet as we know it, with all its potential to be an effective means of distribution, had not materialized.

If you want to start up a business in the real world, for example, you can choose among the options of setting up a store in a crowded commercial district like Ginza in Japan, having your stuff set out on the floor along a busy street, renting a spot within a department store, or having your merchandise sold through someone who is more comfortable facing consumers than you are.

These conventional sales patterns have familiar names like chain stores, franchised stores, distributors, dealerships, roadside stalls, department counters, specialty stores, you name it, and one should feel free to adopt any of the above as you see fit.

In the virtual world of the Internet, as in the world of the tangibles, one can find the whole gamut of the aforementioned types of distribution channels. For instance, PC Home's online shopping website (the largest online shopping website in Taiwan, whose business model is to take orders form consumers and then transfer them to suppliers) could be said to be the counterpart of a hypermarket in the real world. That is, all the items for sale on PC Home are chosen, sourced and put on racks by PC Home staffers.

If you decide to go for this kind of channel, then, the only role you can fit into would be that of a supplier, who simply waits for orders on the Net to be transferred to you by PC Home. All that's left for you to do is deliver the goods. Of course, PC Home has the right to shut your stuff out, but in turn you get to use a platform without having to go about maintaining it, like people having their own websites must.

Through such platforms as Yahoo! Auction or eBay, you can enjoy yourself setting up a small place where people will come and chat with you and maybe get something from you if you guys really hit if off, exactly the way people mingle and do business along bustling streets in Shanghai. There is a flea-market feel to these auction sites, so to speak.

This kind of parallel existence also extends to the duo of real stores and virtual stores on shopping websites, in the sense that Yahoo! and eBay act like commercial buildings where a certain number of spaces are available to be rented out to business proprietors who wish to sell things in the building. People want to move in, because it is the responsibility of the owner of the building to round up enough business to form a cluster and to conduct promotions to boost consumer walk-ins (click-ins).

Also, you can choose to set up a specialty store, in which you sell your very own products. An Internet counterpart to this mode of business would be a website of your own. Usually, people go on this model if they aim to nurture their own brand names or to get a direct hold of the clients, as opposed to the aforementioned business models in which access to clients is in someone else's hands.

Those perks, however, come at a cost that is usually the highest among all of mode of operations. But that price may be justifiable due to the fact that over long term, when your brand name is well and alive, you get to reap better revenues plus a bunch of loyal clients. Just image, who gets the credit for a product provided by you but sold via eBay? Who owns that particular client? You or eBay?

Specialty stores, of course, come in different types. Many famous apparel brand names, for example, set up counters at department stores besides having their own stand-alone boutiques. By the same token, you can at the same run your own website and have a branch set up within a portal site.

To avoid the rather high cost that comes with having a specialty store online, many strategies apply. Some might focus on their own stores if it's the brand name they cherish; others might be happy just to see their goods sold and find having a spot within a portal/auction site a reasonable choice. You, advisably, should consider your operational focus and it should never embarrass you to go back and forth between the two as you see fit.

Other than all the above, there is one ultimate way to lower the cost of opening a store. That is, the franchise system that has roamed the real world for a really long time has finally infiltrated the Internet, as one lesser-known Internet mall has adopted this mode of operations to set the record for the busiest surfer turnover in Taiwan.

You might be taken aback a bit that the virtual business is now conducted in ways so similar to those commonly seen in the real world? But this is hardly surprising, really, since eCommerce has had years of development under its belt and is not exactly a spring chicken anymore. That is, eCommerce now comes in as many modes of operations as one can think of.

The bottom line is that as someone who wants to conduct Internet marketing, you must ponder on such questions as "how do I measure the cost of distribution?", "how badly do you want to have your own brand?", and "would I rather be a supplier and let someone else worry about selling my goods?" These are all distribution issues that you should give thoughts to before taking the plunge into eCommerce.

How can one keep distribution cost to a minimum? How can one get closest to consumers and how can one maximize sales? The one who can possibly answers these questions best for you is yourself. After all, who knows your business better than yourself? Also, don't assume that these questions would have different dimensions if yours was a store firmly based on the ground and not drifting on the Internet. Online marketing is really not a big deal. It's just marketing, if you push the question. (
2004/03/21 - By Digitalwall.com - Way to
China Internet/Telecom )