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Distribution: Channels & Logistics

One interesting aspect of distribution channels occurs when a retailer, in this case, Amazon, integrates backwards with the intent of attracting suppliers (authors with brand names) and the expectation of utilizing other outlets (traditional bookstores) for full distribution of its products. In this case, the largest traditional bookstore chain, which also has a significant online business, has decided not to stock Amazon's products in the hope of discouraging authors from signing publication contracts with Amazon. Effective distribution channels call for vertical cooperation, here among authors and their agents, publishers, and retail outlets. But vertical integration invites conflicts.

Answer the following Questions

Was Amazon wise to get into publishing in addition to its very strong position in retailing new and used books? Explain your answer.

If you were a popular author of children's fiction (with a successful past relationship with a traditional publisher) and your agent (another member of the book publishing channel) asked you whether to approach Amazon regarding the publication of your latest project, what would you say? Why?

Would it matter if you were working on your first book and had no previous relationship with an editor or publisher? If "yes." why would this make a difference?

In your judgment, do you think that either Amazon or Barnes & Noble are likely to change the strategic decisions reported in this article? Why?

Solution Preview

Amazon's decision to enter the new and used books retail industry creates unique advantages and disadvantages. For instance, brick and mortar stores no longer allow Amazon's published books to be sold on store shelves, which is a major downfall for authors because they have limited distribution.

Today, e-business is solidly entrenched in our economy. E-commerce sales are measured in hundreds of billions of dollars each year. And e-business is changing at Internet speed. New businesses and new business models emerge every year, forcing investors to ask hard questions about the future. Whether or not we see another e-meltdown like the one in 2000, e-business in one form or another is here to stay. (Beekman, 2010).

This strategy hinders Amazon from venturing into markets outside the virtual storefront framework. Based on the articles provided in this post, it is my belief that Amazon made a good decision by entering the publishing industry for the reason that the company is at an advantage to establish new relationships with independent authors who are not under the corporate umbrella of a publishing house.

Like all Internet retailers, Amazon has a goal of increasing its "conversion rate", the percentage of browsers who actually buy something on visits to the website. Compared to other big name e-tailors or Internet retailers? ...

Solution Summary

The solution discusses the channels and logistics.

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