1 week, 5 days ago

This is to question the significance of the existence of dealers. Looking for the manufacturer directly does not mean skipping the dealer, but it means that the manufacturer has vertically integrated the role of the dealer to directly serve customers. 

For manufacturers, it's good and bad. 

 first of all, the control ability of the terminal is enhanced. 
 factory direct sales can ensure that they have the most direct control over services, brand image, etc., and will not let dealers pit their own brand for their own performance. 

 another good place is also very intuitive. Naturally, it's one layer less. This is a typical "double marginal" problem in industrial economics. From manufacturer to dealer, we should give some profit space to the manufacturer, from dealer to consumer, and also to dealer. Both of them are distorted by the monopoly power of the market. The total loss caused by this is greater than the market distortion caused by the direct sales of a single monopoly manufacturer. 


But the reality is clearly not as clean as in the model. In reality, there are many costs. All of these factors make it difficult for dealers to be replaced. 

 let's start with the general cost, which is typically the "contact cost" of consumers and the "inventory cost" of manufacturers. 

In reality, consumers are not omniscient. They need channels to understand cars and test drives. As far as the automobile is concerned, the service and after-sales of automobile are different from most of the goods sold by one hammer, and these things are a long-term process. Manufacturers do this directly, which is equivalent to the manufacturer's own 4S shop. These stores, management and other costs, the manufacturer is to go out, so as to reach consumers and make consumers satisfied. But the manufacturer is probably not good at doing this, so it's better to cooperate with a professional dealer than to build by itself. 

 secondly, inventory is the killer of profits, while the market itself is volatile. When cooperating with dealers, they can share part of the inventory with dealers 
 - because dealers can't sell cars well, they always need to reserve part of the inventory. This is a very typical vertical industrial chain. The manufacturer sells the goods to the dealer. For the manufacturer, the goods will be sold out. Next is the dealer's business. The order and purchase of dealers are more regular than the flow of consumers, and it is much easier to manage. 

The above is the necessity of dealers from the perspective of industry. In fact, from the perspective of consumers, 4S stores may not necessarily be inferior to direct sales of manufacturers. 

 essentially, a distributor is a group buyer. 
 although dealers have the profit demand to make money from consumers, they can also get lower quotations from manufacturers. Sometimes, dealers also have the motivation to offset the sales volume and get more margin. Therefore, the direct selling of manufacturers is not necessarily cheaper than the quotation of dealers. Because if the manufacturer does not have a special direct sales channel, the transaction cost brought by direct business with consumers is not low at many times, and it also needs to take care of the channel of dealers. 

Only when the consumer itself is "big", such as large companies and government procurement, these departments tend to bypass dealers and manufacturers to talk directly, and manufacturers are willing to spend some time and energy to deal with this large order. For ordinary consumers, if the manufacturers have to deal with them one by one, it is the same as the manufacturers themselves as dealers. 

Since the birth of the Internet, "disintermediation" has gone a lot. Like digital products, many can be purchased directly online. The role of physical channels is declining, including computers and mobile phones. Some companies can give up physical channels and directly direct online sales, which were not before. But even with computers and mobile phones, there is still a space for physical channels to develop, and online direct sales have not eliminated physical channels, that is, dealers. 

It can be predicted that the traditional distribution channels will be more tenacious, at least in the short term, for the products that need experience before purchase, test drive and maintenance after purchase.


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