Online Sales and the Distribution Network

In this section, we use ideas discussed earlier in the chapter to see how the Internet has affected the structure and performance of various distribution networks. The goal is to understand what drove the successful introduction of online sales in some networks and not others, and how these networks are likely to evolve. 

Similar to our consideration with distribution networks, we build a scorecard based on how online sales affect a supply chain s ability to meet customer needs and the cost of meeting those needs. We now detail the contents of each scorecard category. 

As with distribution networks considered earlier, we start by studying how online sales affect customer service elements such as response time, product variety, availability, customer experience, time to market, visibility, and retumability. We also look at factors such as direct sales and the ability to offer flexible pricing that help companies selling online. 

RESPONSE TIME TO CUSTOMERS When selling physical products that cannot be downloaded, customer requests take longer to fulfill through online sales than in a retail store because of the shipping time involved. Thns, cnstomers who require a short response time may not use the Internet to order a product. There is no snch delay, however, for information goods. The Internet has facilitated almost instantaneons access to movies, music, and books in digital form. 

PRODUCT VARIETY A company selling online finds it easier to offer a larger selection of products than a bricks-and-mortar store. For example, Walmart.com offers a much larger selection of prodncts than Wahnart stores do. Offering the same selection at a store would require a huge location with a correspondingly large amount of inventory. 

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