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With the exception of staying in compliance with Federal Anti-Trust regulation, what...

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yacel0762 | (Level 1) Valedictorian

Posted May 19, 2013 at 7:22 PM via web

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With the exception of staying in compliance with Federal Anti-Trust regulation, what are some of the advantages of a manufacturer diversifying their distribution network versus contracting with a sole big name merchant? 

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farouk23 | College Teacher | (Level 1) Associate Educator

Posted July 26, 2013 at 9:51 PM (Answer #2)

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Having a sole distributor of your product does not necessarily mean that you are violating federal Anti-Trust laws. A manufacturer of a product can have an exclusive distributor of their product (this is done all the time) and still be in full compliance of Anti-Trust regulation. The law is specifically meant to prevent market monopolies and to restrict undue hindrance to free trade and market forces. In regard to the advantages of allowing smaller retailers limited access to a manufacturers product in addition to the big box stores, here are a few benefits:

  1. Allows the manufacturer to negotiate more favorable terms as their sales are not entirely dependent on a single distributor.
  2. A diversified distribution network allows for better resilience to outside forces beyond the manufacturers control (e.g. store closures, inclement weather etc.).     
  3. Provides a wider range of locations for consumers to access product, which results in a larger brand footprint and increased sales.

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