2, Costs and Benefits of using A Distributor Who Offers Shipping Discounts
There are various benefits for companies that use a distributor who offers shipping discounts but takes a portion of the profits to avoid paying shipping costs. The main benefit of using such a distributor is an increased customer reach beyond the company’s limited capabilities if it used direct shipping. The more comprehensive customer reach attained through using a distribution channel means there is prospects for higher sales (Osborn, 2018). It also allows the company to focus on its core competencies and marketing efforts since the distributor would focus on offering logistical support to the company. This is because the distributor would meet the company’s supply chain needs. Sharing profits is the major cost of using such a distributor. However, the benefits of wider customer reach, coupled with more sales prospects, are enough incentives for sharing profits.