Almost all business people want big profits. Success in selling consumer products is inseparable from how we manage distribution channels. Therefore, every company must be able to determine the right amount and time of ordering so that consumer needs are met without having to incur large costs.
The existence of distribution channels for producers certainly provides a lot of convenience in marketing products and ensures products can reach consumers safely. A well-managed distribution channel will greatly benefit the company in distributing its products.
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Distribution channel is a path used by producers to move products while transferring ownership of products either directly or indirectly from producers to consumers. Through distribution channels, producers can conduct marketing research in order to find out various information about customers, competitors, and other forces in the potential marketing environment at the same time.
Markets and shops are places where sellers and buyers meet directly, markets or shops are also part of the final distribution channel and tend to be in direct contact with consumers.
In the past, before the existence of the modern market, circulating products would not be difficult to enter the market and the conditions for entering these products also tended to be easy, in contrast to the current condition, with many modern markets such as supermarkets, minimarkets, hypermarkets, of course, every producer must meet certain conditions in order to enter the product. So that currently in the distribution there are two terms, namely, general trade and modern trade.
Definitions of General Trade and Modern Trade
General trade is devoted to deal with traditional markets (eg small stalls). The sales method is carried out by distributors or (intermediaries). For example, shops that are owned by individuals and usually serve local customer requests. Generally, the average customer in Indonesia tends to go to general trade to shop for food and other last-minute household needs.
Meanwhile, modern trade is a trade that is devoted to handling modern markets such as hypermarkets, supermarkets and minimarkets whose operations are more organized than general trade. Because the place is wider and tends to be far from housing, modern trade tends to be visited for more planned monthly shopping.
Difference between general trade and modern trade
In terms of products, general trade provides a variety of products or merchandise in the form of food, clothing, and other goods, most of which are easily movable. General trade is not just a place to buy and sell, but develops with the concept of life and socio-cultural interaction. General trade or traditional markets have the advantage of a strategic place because they are built close to residential areas. In addition, the diversity of products sold is a characteristic that general trade is one of the economic boosters for the citizens. While the shortcomings in general trade are identical to dirty and shabby and less regular in their location. While the packaging is not good and the quality of the product is often not guaranteed because there are still many counterfeit products in circulation.
Judging from the management which is carried out in a modern way, prioritizing service for the convenience of shopping customers, management that is in one hand, has large capital, and is equipped with a definite price tag. Apart from the non-negotiable price point of view, modern trade has various advantages from the customer’s point of view.
These advantages include a clean and comfortable environment as well as longer and scheduled operating hours. To provide maximum service, various payment systems are also available, such as cash, debit, credit cards, vouchers, and so on. Meanwhile, the drawback of modern trade is that there is no bargaining process. The shopping process is done independently and there is no social interaction.
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Modern Trade vs General Trade, which distribution channel is suitable?
For producers who are doing business today, it is very important to determine the distribution channel, namely by choosing the appropriate type between general trade or modern trade.
There are many things to consider in choosing a distribution channel, namely the budget, competitors, product conditions, target market, and available resources. At present, the development of modern trade in various cities in Indonesia has indeed begun to invite concern for small and micro traders in traditional markets (general trade).
Market penetration carried out by modern trade by opening distribution networks to the sub-district level is considered to immediately turn off general trade managers as the main distribution channel for the small and micro economy. Not to mention that modern trade has advantages in terms of service, clean appearance, complete products, and low prices.