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Organizational Data 131

Figure 5-3: GBI US distribution channels

A unique combination of a sales organization and distribution channel
is called a distribution chain. Some master data, such as material master and
pricing conditions, are maintained at the distribution chain level.

Business Processes in Practice 5.2: Distribution
Channels at Apple

Apple Inc. provides a good example of a company that When it is not feasible for Apple to establish a retail
utilizes multiple distribution channels. Apple sells its store in an area with a strong potential consumer base,
products through its online store (Internet), its Apple the company must partner with another retailer to resell
stores (retail), and third-party retailers (wholesale). its products. Although this arrangement eliminates
Apple uses each of these channels to resolve different many of the retail costs identifi ed above for Apple, it
issues within the fulfi llment process. also reduces Apple’s profi t per unit, because Apple must
Because Apple places a priority on the customer’s now share its sales revenues with the reseller.
buying experience, it tries to establish either an Apple- Online retailing eliminates a great deal of the costs
owned retail store or a mass-market retail store in every associated with operating physical stores. In addition,
major market. This policy ensures that the majority of because the online channel sells directly to consumers,
consumers in most developed nations live within a short Apple does not have to share its profi ts with a reseller.
distance of a retail store that sells Apple products. However, because online retailers sell to any number of
Although retail stores offer the best opportunity locations around the world, they must deal with ship-
for consumers to examine the products before purchas- ping, taxes, and import costs that the retail channel
ing them, maintaining an extensive network of physi- does not have to. In addition, they must invest in the
cal stores entails many major expenses, including real technical infrastructure that supports a global online
estate, local taxes, and retail staff. Therefore, Apple retail site. Apple’s online retail operations, including
very carefully evaluates new locations for its stores the Apple store and iTunes, are based on SAP ERP.
based largely on the local demographics of those con-
sumers who are the most likely buyers. Source: Apple company reports.

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