If you are referring to the method of distribution from an online retailer, consider Amazon.com. This thriving website offers thousands and thousands of products in a variety of categories. Amazon.com actually has a huge warehouse where almost all of their product offerings are kept. They also offer seller-to-buyer communication where they do not house the products.
Within this vast warehouse, orders are filled by Amazon employees who travel the aisles on high rolling ladder platforms, collecting the ordered items and boxing them. The individual orders are placed on a huge conveyor belt in this factory where employees have the contents shrink wrapped. Then it continues to travel, the box is automatically taped closed, and a computer places a label for delivery to the customer.
This is a very efficient and successful operation that started out as a very small online business that is now a giant in the industry.
In on-line retailing there is no need for the buyer and seller to meet face to face during the initial steps of buying process. But in the end, for the sales process to be complete, buyer must make payment to the seller, and the seller must physically deliver the goods purchased to the buyer.
To a large extent the process of payment to the supplier can also be completed over the Internet. Also some goods like music or videos, which can be converted to digital form, can be delivered over the Internet. However all other physical goods must be physically transported from the locations where these are manufactured to the retail purchaser. In business this process of physical transfer of goods from manufacturing locations to the buyers is called physical distribution.
The nature of physical distribution in retail selling is quite different from the traditional selling where the goods move through a chain of distribution channel partners such as wholesalers and distributors. In comparison, on-line retailing require that goods move directly from the manufacturer to the buyer. Also the goods must be delivered to the doorstep of each buyer, rather than buyer collecting it from a physical retail store.
This kind of direct delivery from manufacturer to customer requires that the goods meant for delivery to each customer must be identified and liked with customer order at the time of dispatch from manufacturing location or from some other major distribution center. Also the transportation cost tends to rise steeply because the average size of transport consignment is much smaller. To counter the transportation costs down many new transportation models have been developed for on-line retailing.
Because of these characteristics on-line retail distribution typically consists of the following steps.
- Transmission of customer order details to the locations where the goods are manufactured are stored in bulk. Frequently one customer order may require supply of goods from different locations. In such cases each of the location must get the information about the goods to be supplied from the location.
- Orderwise gathering or mteria at each of the location.
- Transport of mall the different items include in each customer order to a common location.
- Order wise consolidation of items from different locations and packaging these suitable for onward transport and delivery to buyer.
- Transportation of the goods to customer. Frequently it is using some system of express package delivery service.
- Delivery of the package to the customer at his or her doorstep.