Direct Sales Model Case Study

The direct sales model came into use in the mid- and late 1800s when manufacturers realized they could sell directly to customers through catalogs. Rather than selling their product to retailers, which increased the price (in order to take profit) and sold the product to consumers, manufacturers themselves were able to fulfill orders through the mail. By applying this approach manufacturers did not have to worry about distributing their product to stores or manufacturing huge amounts that might or might not sell. Instead, they became capable of shipping directly to customers and to manufacturing only enough of a product to fill the orders that came in.
As information technology shined, common access to the Internet created a whole new scene for the direct sales model, in which …show more content…
First one is its reliance on market forecasting to drive production. Even the most successful manufacturers, were chronically bedeviled by their inability to accurately forecast demand in a market. They were either caught with bereft of highly demanded hot products, causing them to lose markets to rivals, or stuck with excessive stock of slow sellers, which often had to be sold at a discount or even loss to move them out. It is a direct consequence of not being connected with final customers.

The high inventory costs and lack of responsiveness of the indirect channel meant that there exists an opportunity for someone who could and a way to circumvent the channel by selling its products directly to the final customer. Selling directly removes two links in the supply chain where inventory could build up and also enables the manufacturer to know its final customers, give better service to them, and grant promotion repeat or expanded sales to them. Information technology has provided enough space for manufacturers to improve their experience in using and optimizing direct selling