The aim of this article is to highlight why retails sales and traditional product distribution are rapidly being replaced by direct sales and intellectual distribution.



To begin, let me highlight what I mean by retail sales and traditional distribution: In traditional distribution, manufactured products are sold to wholesales. The wholesalers then distribute those products to retail outlets and the retail outlets sell the products to the customer at a significantly higher price than than they are actually worth. Retail outlets have no choice other than to charge more, as they have to pay for promotion, staffing costs, heating, etc. and those costs must be covered by the customers if the retailers are to make money.

Intellectual distribution is the ability to provide product and service information to the end consumer, who then buys from the manufacturer (direct sales).

Have you ever visited a shop to discuss product prices, only to return home and find the product much better value on the Internet? The product you are purchasing is the same in every way, but Online you may be buying it directly from the wholesaler or even the manufacturer. The World wide web has impacted on the way businesses advertise and educate us about their products and the costs to the consumer are greatly reduced as a result.

What does this mean for retail distribution? Can you see why many retail outlets and superstores are suffering? Is this situation going to continue?

I believe that it is the older generations who may be less skilled using computers, keeping large sections of the retail industry from disaster. Imagine what will occur when the bulk of the population are on the Internet and ordering directly from the manufacturers. Many people do grocery shopping on the internet, Christmas shopping on the internet, we buy books, cds and dvds online! Is there any limit to what that we can buy directly from wholesalers or manufacturers?

The reality is that retail distribution is declining and direct sales is growing. This may be a very bad thing for retail outlets (look what happened to Woolworths in the UK!), but an excellent thing for direct sales businesses (i.e. Amazon).

As individuals we can benefit from these economic changes. Firstly, we can purchase services and goods from direct sales companies. Also, we may be able to partner with a direct sales company, promoting the products and services they distribute. You can be an independent distribuor and generate commissions from any sales you generate. This is ideally suited for the Internet and is definitely something worth considering in the 21st century!