Welcome to class of
International Distribution
by
Dr. Satyendra Singh
University of Winnipeg
Canada
International Distribution
• Distribution Structure
– Traditional
– Modern
– Retail Giants
• Distribution Patterns
– General
– Retail
Distribution Structure…
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Difference Between Domestic and Foreign Structure
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PEST
Super-efficient system in the USA vs. highly complex in Japan
Traditional Distribution Structure
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Import-oriented structure
High price, small no of affluent customers
Sellers market  demand exceed supply
Absence of cars and telephones
Local monopoly of small stores
Buy daily in developing country vs bi-weekly in Canada
Intermediaries do not perform specific activities
Import-wholesalers perform marketing function
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Advertising, marketing research, warehousing, financing, storage
Distribution Structure…
Distribution Structure…
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Japanese Channel Structure
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Small intermediaries and dealers
Manufacturers control the channel
Business philosophy is rooted in the unique culture
Laws protect small retailers
Distribution Structure…
Distribution Structure…
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Modern Channel Structure
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Change in discounting, self-service, mass merchandizing, return
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Change in direct marketing
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Wal-Mart, Carrefour (France), Praktikar (Germany), Ikea
(Sweden)
Higher margin in EU than US
Internet-based system for ordering and delivering (low cost,
efficient)
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Door-to-door selling, hypermarkets, shopping malls, catalogue,
Internet
GM, Ford, Nissan, Renault and DaimlerChrysler www.covisint.com
Roebuck and Carrefour www.gnx.com
Brick-mortar eg. Dell, Brick-click eg Amazon, DHL, UPS
Convenience store as a pickup points for web-orders
Distribution Structure
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Retail Giants Structure
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Retailers cannot export except by Internet
Wal-Mart, McDonald’s, Home Depot take risk in foreign markets
Europeans: quick to enter foreign market, emphasis on being first,
retail strategy, local needs and taste
Americans: exploit domestic market first, emphasis on efficiency,
standardization and value to customers
International retailers have advantages over local retailers
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World-class business processes
Technology
Financing
Organizational capabilities
Greater buying power
Superior service…
World’s 10 Largest Retailers
Distribution Pattern…
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General Pattern
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Foreign channels are not the same as domestic channels
Intermediary services are different
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Line breadth
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Storage and wait for customers to come and see them, India, Egypt
Dealing-only narrow lines
Requires government license
Cost and margin
Shorter channel for industrial or expensive goods
Inverse relationship b/w length of channel and size of purchases
Non-existent channels – selling on the roads!
Blocked channels – competitors or relationships
Power and competition – large whole sellers finance downstream
Limited stocking – pickup from factory/distributor, if possible
Distribution Pattern
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Retail Pattern
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Product lines: narrow (Italy,Morocco) vs. broad (Japan)
Size pattern
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Direct marketing – mail, tel, door-to-door
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No of person served per retailer– higher in developed countries
May be difficult to reach so many small retailers across a country
Depends of economic development – single cigarette
Usually best for developed economy, but Eastern European gaining
popularity; e.g., Amway
Resistance to change
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Government attitude
Local retailers need to compete
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Product selection
Greater convenience
Customer service
Liberal store hours
Retailers cannot close/open stores at their wish
Retail Structure in Selected Countries