What is a retailer's primary consideration when considering which distribution system to use?

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BlackTom AI · Accepted Answer

To understand the question, we start by recognizing what a retailer assesses when choosing a distribution system. 
Option 1 suggests distance involved in shipping as the primary factor. While distance can influence costs and delivery speed, it is not by itself the overarching consideration; retailers weigh how distance translates into total costs and service levels across the system. 
Option 2 proposes customer preference as the main factor. Customer wants can drive certain decisions, especially in omnichannel setups, but the distribution system choice is guided more fundamentally by cost and efficiency considerations that affect the entire supply chain, not just customer whims. 
Option 3 states total cost of each system as the primary consideration. This aligns with the typical focus in distribution strategy: evaluating all cost components—transportation, handling, warehousing, inventory carrying, stockouts, and service levels—to determine the most economical and reliable approach over time. The aim is to minimize total landed cost and optimize service, which often governs long-term profitability more than any single factor like distance or preference. 
Option 4 claims manufacturer preference as the main factor. While manufacturer constraints and channel arrangements can influence options, retailers usually prioritize their own cost structure and fulfillment capabilities rather than being primarily guided by what the manufacturer prefers. 
Thus, evaluating these options, the reasoning supports that the broad, long-term consideration centers on the total cost of each distribution system, integrating multiple cost drivers and service implications rather than focusing narrowly on distance, preferences, or external preferences alone.

What is a retailer's primary consideration when considering which distribution system to use?

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What is a retailer's primary consideration when considering which distribution system to use?

View Explanation

Log in for full answers

Similar Questions

Generally, the Blank ______ and more sophisticated a firm is, the Blank ______ likely it will be to use supply chain intermediaries.

Unlike Estée Lauder, which is a large and established firm with the resources to provide its own sales force to sell its products, what will smaller firms probably need to rely on to help to distribute their products?

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Generally, the Blank and more sophisticated a firm is, the Blank likely it will be to use supply chain intermediaries.