Fujian Wanhua Electron and Technology Company Limited - Essay Example

? Internet-Based Channels of Distribution Internet-Based Channels of Distribution Many a commentator has d the contribution of the Internet and technological advancements in the business world. Closely related to the Internet are such technologies as electronic money and social media, all of which have been associated with significant changes in the ways businesses operate in the modern world. Across the world, the Internet has revolutionized the way products are produced, marketed, and distributed. Furthermore, it has proved to be a very effective way of distributing products to consumers. It has done this by homogenizing time, making location irrelevant, and killing the effect of distance as noted by Berthon, Berthon and Pitt, (1999). It is indeed not an uncommon phenomenon to encounter businesses marketing and selling their products online either through their own portals or by relying on sites owned and managed by third parties. In the first case, the company produces and markets the product online without necessarily relying on players in the traditional distribution channel such as distributors, wholesalers, and retailers. This paper will discuss how technological advancements and the Internet have impacted product distribution in the world today. The Case of Fujian Wanhua Electron and Technology Company Limited One company that relies on the Internet to distribute its products is the Fujian Wanhua Electron and Technology Company Limited. The company is based in China and was established in 1996 (Fujian Wanhua Electron & Technology Co. Ltd., 2013). The company produces a variety of electrical and electronic appliances for home, business, office, and corporate use. Some of the products that the company manufactures and markets include car alarm systems, cordless telephone communication systems, network management systems, and home/office wireless burglar systems (Fujian Wanhua Electron & Technology Co. Ltd., 2013). While the company relies on the traditional distribution channels partly, it is to a great extent oriented toward distributing its products directly to consumers. The company promises high quality products that are reasonably priced to its real and potential customers wherever they are around the globe. Advantages of Direct Online Distribution of Products There are several advantages associated with direct distribution of products using the Internet. One main advantage with this method of distribution is its association with low overhead costs according to Time (2013). What this means is that the company is able to make a bigger profit that it would with the inclusion of intermediaries. This is the case considering that the company does not share the profits it gets with the intermediaries. Furthermore, a business that does direct online distribution is guaranteed to reach a global audience (Time, 2013). For example, although Fujian Wanhua Electron and Technology Company Limited is based in China, many people know about it or at least about its products across the globe. This may not be the case with businesses that rely on the traditional method of distribution. In many cases, they end up having a market that is limited in reach and therefore a smaller capital base. Yet another advantage of direct distribution through the Internet is that it offers customers/consumers a lot of convenience (Time, 2013). Consumers can get to shop for the products they desire at any time of the day or night and at their convenience wherever they are as long as they have access to the Internet. What this means is that the consumers are not limited to shopping by time. Since intermediaries are not involved in the transactions, the customers benefit from the direct arrangement in that they get products at prices much cheaper than they would otherwise get with the involvement of intermediaries (Gillai & Lee, 2009). Many customers tend to like the idea of dealing directly with product producers (Time, 2013). Furthermore, the customers are more likely to receive superior customer care services wherever they are in case they experience a problem with a product they have purchased from the manufacturers than they would with retailers or other intermediaries. Disadvantages of Direct Online Distribution of Products In as much as direct distribution over the Internet has several advantages, it is not without a few disadvantages. One main disadvantage associated with direct distribution is that the company most likely does not enjoy the geographical reach and level of distribution in terms of business volume that major wholesalers and retailers can achieve. For example, Fujian Wanhua Electron and Technology Company Limited may not sell as many of its products through its website as its compatriots do through supermarkets and popular electronic shops. One main disadvantage that the customer has to bear with when purchasing products from producers directly over the net is the need to shoulder shipping costs. Yet another disadvantage of direct distribution over the Internet relates to the time taken for the product to reach the customer. While a consumer may get whatever they have bought from a retailer as soon as they pay for the product at the store, this is not often the case in the case of direct distribution where the Internet is concerned. The customer often has to wait for days or even weeks before they receive the product that they have bought. Furthermore, the product that they receive may end up being one that they do not like after all. Whatever is displayed online may not be the as good as the product that is shipped to the customer. Conclusion Many organizations have opted to use the Internet to distribute their products directly to consumers, by passing intermediaries that characterize the traditional method of distribution. Direct distribution of products in this way is associated with several benefits. Apart from being cost effective to producers, it offers convenience to buyers and presents them with cheaper products. The method is, however, disadvantageous in that buyers may have to spend more as they foot the shipping costs. Furthermore, direct online distribution may not achieve the huge volumes that the traditional distribution method achieves. Generally, the use of the Internet for the purposes of product distribution is likely to grow in popularity across the world for its effectiveness and advantages related to product cost and price. References Berthon J., Berthon, P. & Pitt, L. (1999). Changing Channels: The Impact of the Internet on Distribution Strategy. Business Horizons. http://hbr.org/product/changing-channels-the-impact-of-the-internet-on-di/an/BH036-PDF-ENG Fujian Wanhua Electron & Technology Co. Ltd. (2013). Who We Are? Retrieved November 4, 2013 http://wanhuatech.manufacturer.globalsources.com/si/6008835035745/Homepage.htm?source=CoyName_TP&pkg=P3 Gillai B., Lee, H. (2009). Internet-Based Distribution Channel for Product Diversion with Potential Manufacturer’s Intervention. International Series in Operations Research & Management Science 131(2009):115-154 Time F. (2013). What Is a Direct Channel of Distribution? Demand Media. http://smallbusiness.chron.com/direct-channel-distribution-42213.html Read More