Meaning of Distribution and Its Process

Meaning of 'Distribution'

After the collection of the goods or products, the problem of their distribution emerges up. The goods or products that have been collected, supplying them to the purchasers in the smaller lots is known as the 'distribution'. In other words, it might be said that sending of the products, collected or gathered at different centers, to the consumers and industrial consumers scattered at various places, is known as the 'distribution'. By means of the distribution activities the products are distributed in accordance with the needs or the demands of the consumers.

Distribution Process

The distribution is required for the reason that the raw materials could reach the product-manufacturer and the finished or manufactured goods could reach the consumers by the medium of the middlemen (agents). By it, on the one hand, the requirements of the manufacturers are met and on the other, the needs of the consumers.

The distribution work is mostly undertaken by the whole-sellers. The wholesellers sell their goods to the retailers and the latter in their turn, sell it to the consumers. In the process of distribution, are included the activities of transport, collection and storage, sales, finance management, risk-bearing, classification and standardization.

In the distribution process, mainly the following activities are included:

(1)   Transport. Without transport, the task of distribution could not be performed in the modern era. The function of transport is to take the product from the production-place to the consumer. Due to the help from the transport systems only, it has become possible to undertake production on a large scale. Transport expands the market of the commodity. By the means of transport, the places where there is the demand of the products, the products could be shifted. In the distribution system, the transport occupies a very sig­nificant place.

(2)   Storage. In the distribution system, the storage also oc­cupies a very significant place. Within the storage, the commodities and products are kept safe since the time of their production to the occasion when these are consumed.

(3)   Sales. Sales itself is the very foundation of the distribu­tion and marketing. The sale of the products is the main activity of the distribution system. The task of 'sales' could be undertaken in any way, directly or indirectly.

(4)   Finance Management. Due to the time-gap between the production and sales, there is the need of finance. For providing the credit facilities to the wholesellers, retailers and the consumers too, there is the need of the finance. Ordinarily, money has to be arranged for purchasing the product and its storage. The finance has ordinarily to be arranged by the producer.

(5)   Risk. Like the other commercial activities, there is risk in the distribution too. Risk might be of various types, for instance, fire, hailstorms, floods, transport, fluctuations in the prices, risks due to the variations in the fashions and styles. In bearing the risk, insurance is very much helpful. Thus, in the distribution system, the risk-bearing (enterprise) too is an important element.

(6)   Standardization. Immediately after the standardization and gradation of the products, there is the distribution of the products. On the basis of the color, shade, size, kind, and quality of the product are their standards (grades) determined. The products which are graded and standardized, the customers purchase them without checking or testing.