Over the span of ten years, our retail experience has changed drastically as technology has made shopping much more efficient and stress-free. The main reason is that millennials have grown up with the prevalent influence of the internet and the consistent adaptation of new technological devices. If you take a step back and peek into 1991, then you would notice that the Gen X and Gen Y generations had to physically attend a retail brick and mortar store. Indeed, the game has changed, and has opened new avenues for retail growth.
The purpose of distribution is to facilitate the physical exchange of services and products(Peterson et al 1997). In exchange, both consumer and company are willing to pay a fair price requirement for the services and products. In order to make the consumer happy, the product needs to be presented at the right time, right place and in the condition the consumer wants it to be. In the case of millennials, the Internet is going to play a heavy role in helping them research their products, compare prices and purchase their products.
There are three types of traditional distribution channels:
The manufacturer supplies the products directly to the consumers. The manufacturer deals with all the marketing functions without the aid of a middleman. An example of this is a door-to-door sale and factory outlets.
The manufacturer includes one intermediary, which is the retailer to market and sell the goods to the consumers. This is a common form of distribution for clothes, cars, machines and furniture, and it reduces sales expenses for the manufacturer.
Selective Distributive Channel
The manufacturer includes two or more intermediaries: the wholesaler and retailer. The wholesaler buys and stores products in bulk from the manufacturer, and in return, supplies retailers with smaller quantities of the products(Cateora et al 2016).
Cateora et al (2016) states that the internet is an important distribution method for most companies and a source of products for customers and businesses. E-commerce can be used to market B2B services, customer and industrial products and customer services via the World wide web. Van den Poel and Leunis (1999) predicted that the Internet would help make purchases much faster and efficient. Therefore, retailers have introduced e-commerce distribution models that make purchasing extremely stress-free via mobile apps and well-designed UX websites. Many retailers such as WholeFoods are embedding the click-and-drive concept, where consumers can purchase their products and have them ready for pickup at a specific time. In this case, online grocery shopping could help millennials resist impulse shopping, which would reduce the latter guilt, save some money and reduce time waiting in line.
In the research conducted by Nielson, they found that personal care and household goods were prime selections for inventory and fresh produce and condiments weren’t as demanded. They saw that our primary shoppers (Millennials) had a keen interest in health and foods that fought disease. Even though there isn’t a high demand for fresh produce, many consumers are ready to pay for pre-prepped meal delivery and local produce delivery services. Thus, there is an opportunity for retailers to still venture into the health market. I wouldn’t be surprised if there was an app next year about instantly delivering ingredients for your favourite diet meal in the next hour.
Besides having a click-and-drive concept, WholeFoods has successfully embedded ApplePay with 3.3 million transactions, and the addition of Instacart has increased sales to $1.5 million per week. WholeFoods also found that consumers loaded their carts much more than they did at the brick-and-mortar store. This is interesting, because it makes you wonder whether the newest health trend is really catching up to millennials. The fact that WholeFoods has successfully targeted their niche market very well (young, health conscious and tech savvy consumers) and collaborated with two successful intermediaries (ApplePay and Instacart) has made the e-grocery shopping experience effective and efficient. For those who think that their produce won’t be fresh enough or expired once delivered, come on, it’s WholeFoods. They strive to purchase high quality produce from farmers and best organic products from manufacturers. Therefore, their prices are high, but consumers are willing to pay either way for it. The final verdict is that millennials have definitely re-shaped the whole e-commerce and retail market. Did you think that ten years ago, we would have the opportunity to shop for groceries online? I didn’t.
Cateora,PR,Gilly,MC, Graham, JL, Money, RB 2016 International marketing, Seventeenth edition,McGrawn Hill, New York.
Dirk,VDP & Leunis ,L 1999 ,’Consumer acceptance of the Internet as a channel of distribution,‘Journal of Business Research, 45, 249-256.
Peterson, RA,Balasubramanian,S & Bronnenberg,BJ 1997 ,’Exploring the implications of the internet for consumer marketing’, Journal of Academy of Marketing Science, Vol.25 p.329-346.
Mavis Maravanyika- 216041785