have you ever ordered an item online and it says it'll take two or more weeks to deliver then you look at a similar product that will deliver in two days what causes some items to be delivered quicker than others this is the second video in unit 4 channel management take a look at this breakdown which shows you how often this unit will come up on District State and international exams for each of the different clusters [Music] hello and welcome this is lesson 4.2 methods of distribution now let's get to work team today's video is all about methods of distribution how a product gets into the hands of a consumer there are five big topics here first we need to Define distribution then we'll go into the six modes of transportation that make distribution possible next we'll talk about storage including private and public warehouses and we'll conclude the video by describing the four types of utility and ownership distribution refers to actually getting the product to the end user while it's one specific thing it influences how businesses promote the product in its final price for example if you run a promotion you have to make sure that the products are delivered on time for the orders from the promotion to be fulfilled it would be super disappointing to get a product in two weeks when it was promised in two days Deca loves to include this on exams so if you're answering a question that involves a promotion keep in mind that you need to coordinate promotional activities with distribution by contacting the members of your supply chain additionally distribution is expensive so it's costing to be considered in the price of the product there are a few strategies used to make this more efficient it's easier to ship large quantities and distribute smaller quantities so intermediaries might use a practice called bulk breaking which is when a manufacturer ships large quantities but somewhere along the distribution the products are sold in smaller quantities for example it's easier to ship a crate of a thousand apples to a grocery store rather than ship 1 000 individually wrapped apples but from the grocery store's perspective it's easier to sell individual apples so the store will break up the big shipment into smaller parts distribution channels have their own version of agents who are used to organize shipments they're called Freight forwarders they combine shipments from multiple companies in order to increase the efficiency of shipping and lower Associated costs for the companies involved so a shipping boat in a Chinese Port might have products from a dozen different factories that are headed to San Francisco for distribution to Apple Tesla and twitch but how do the products actually get to the user transporting a product can be up to 10 percent of the cost of the product so it might be tempting to just use the cheapest shipping method but every type of Transit has advantages and disadvantages we'll talk about six of them today Road rail air water Pipeline and digital the most common type is Road Transportation which is trucks cars buses Vans Etc trucks are obviously the most commonly used and can be modified to carry specific products like you need a refrigerated truck to transport meat or produce but where the truck comes from can make a cost difference too a company can either use a private carrier or a common carrier private carriers refer to companies that have their own delivery trucks like Amazon while common carriers are trucks for hire if you start a business tomorrow you're probably not going to be able to afford a fleet of your own trucks like Amazon so you'll have to use a common carrier Road transportation is great because it can be delivered to very specific locations but it's relatively expensive and there can be delays from traffic next rail transportation is any transportation on a train steel cars and coal are commonly transported by rail it is one of the least expensive methods and is good for long distance delivery flatbed rail cars can carry massive weight like shipping containers and truck tailors plus the contents of the containers aren't unloaded until their final destination which minimizes product damage but Ray rail transit's main disadvantage is its limited destination trains can only deliver where there are train tracks air transportation is the most expensive method of transportation and the least used but it's still appropriate in some cases products that are light or products that spoil in a short amount of time are good candidates for Air transport or if you have a really tight shipping deadline you might use a plane so the advantage of speed the disadvantage is cost now let's talk about water transportation this includes three categories of ships or Freighters ocean-going ships Inland ships and Coastal ships ocean going ships are massive ships used to transport products across the ocean this usually involves two or more countries Inland ships are smaller ships that use rivers and large bodies of water like the Great Lakes to transport cargo and Coastal ships move products up and down the coastline of a country think of a ship going down from Portland Oregon to San Diego California now ships or Freighters can be modified depending on the cargo that they carry tankers are ships made for carrying petroleum oil barges are holding vessels that can be towed or pushed and container ships hold large metal shipping containers that carry cargo over large distances these containers make it so you don't have to unpack the container until it's arrived at the retailer bicycles can be manufactured in Taiwan packed into a container and then unloaded directly from the container at the bike shop in Milpitas as we discussed this minimizes product damage now water transportation is cheap but there are a few disadvantages it's the slowest option and products arrive at ports rather than Inland destinations this means there will be at least some Road transport involved in the distribution too also the products are prone to damage or delays due to hurricanes and monsoons and ships are prone to import fraud and terrorism and Pirates I'm not even joking pipeline transportation is used to transport liquid products over long distances the products are safe from theft and damage however a pipe leak can result in extensive environmental damage lastly digital transportation is inexpensive and can ship products immediately for example purchasing music or an e-book are both fast and convenient the biggest disadvantage is the obvious this only applies to digital products that was a lot of information so here's a table that summarizes the pros and cons of each type of Transportation feel free to screenshot this for future reference okay we've talked about how different methods of distribution can move things around but once someone gets the goods where do they put them there needs to be a holding area to protect products from weather theft and external damage this is where storage comes in both manufacturers and retailers need some kind of storage to hold inventory sometimes these businesses will need to lease space which costs money and thus increases the final cost of the product some large companies like Costco have their own Warehouse facilities this is an example of a private Warehouse spaces owned and operated by single companies for their own use smaller companies will need to lease storage space usually at public warehouses which are places that offer storage services to any company that pays another option for smaller companies is to use their wholesaler space as storage until all the retailers are ready to buy more products by using this method smaller companies don't have to worry about a mountain of old products taking up space in a public Warehouse instead they have tiny piles of products that will eventually get to Consumers and while it's cheaper it usually takes longer for the the products out to the consumer which they won't like in an earlier video we discussed the five types of utility they were Place time possession form and information utility distribution affects four out of the five types utility the only one that really isn't impacted by distribution is information utility so let's review the other four you offer Place utility when you place products in convenient locations for the customer Distributing sunscreen at the beach adds Place utility because that's where people are going to need sunscreen you can offer time utility when you get a product to a consumer when it's needed when planning distribution you need to prioritize timing when you deliver a product late you risk losing customers possession utility is a satisfaction of receiving a product or service when you distribute a product to the end user that results in possession utility for that consumer finally form utilities when a business changes the form of something to make it more useful for someone within the channel distribution production often transforms raw materials into much more useful finished products okay our last topic for today is ownership when you transfer products through a channel of distribution you are also transferring own from the producer to the end user people called intermediaries take ownership of the product as it moves to the supply chain so these actors are liable for any losses or damages the exceptions are those agents and Brokers they never assume responsibility for any Goods they are simply responsible for facilitating a negotiation now that we've gone over all the content it's time to test your knowledge with a real Deca question pause the video and try to answer the answer is C now a seems like it might have been right but remember that Freight forwarding services are useful to organize shipments however it's not required that companies actually use them while it's true that online businesses can easily cater to an international audience that is one benefit of using the internet as an intermediary and here are the sources we use for this video feel free to check them out if you still have any questions all right that pretty much sums up lesson 4.2 methods of distribution great work team and we'll see you in the next video