Question

. Why does a business often start off selling goods directly to consumers (you need to name and explain at least three reasons to earn full points)? What are three reasons why the business may add or transition to indirect markets.

Answer 1

Wholesalers have been making up a whole industry for decades by acting as intermediaries between producers and consumers. They would buy items in bulk at a set price from the suppliers, then market them at a higher rate to customers, frequently doubling or tripling their production. Many years, producers have followed this business model because it was the only way to get their goods to consumers. Wholesalers offered the workforce, facilities and retail space that the producers were simply unable to manage on their own.

Businesses used to need interested wholesalers to be seen as a legitimate business. To get in front of customers and make sales, they needed the credibility of an existing retailer. But with sites like Amazon and Etsy, it's obvious that consumers are no longer just buying what's available; they're willing to look for very specific items that meet their needs and desires. Industries of all sizes have made millions, mostly delivering from private homes and garages, selling completely online. We can also afford to sell the goods for less than the suppliers by avoiding retail space expenses and wholesaler fees, making them all the more appealing for buyers.

Wholesales are still going to be a big business; it may just look different from today. Most producers have no personnel or ability to deal with internet sales or direct sales. They have no space or experience to sell to customers directly. This is a great opportunity to make money for a wholesaler. Wholesalers will handle the end of the market instead of suppliers by moving to selling to online retailers or by handling sales themselves. This can be as easy as setting up an Amazon or eBay account or as complex as partnering with major sites on exclusive deals, but it can be tailored to suit the business goals.

External sales channels have their own advantages. Indirect distribution allows you to: share shipping and storage costs make it easier for consumers to realize that their goods benefit from the experience, resources and selling power of your third party to escape the difficulty of handling delivery logistics