Contents

• This document reviews the paper “Changing Channels: The Impact of the Internet on the Distribution Strategy”
• Pitt, Leyland, Berthon, Pierre and Berthon, Jean-Paul 1999, Business Horizons, March-April issue.

Description

The emergence of new technologies has created a revolutionary phase for economy and market forces in different industries. Due to the globalization of businesses, companies have started adopting the concept of supply chain integration to stay ahead in competition. Information technology and in particular, the Internet presents many opportunities for companies to improve their production, communication and distribution channels. In the context of distribution channels, the Internet has totally transformed the channel structure. As Pitt, Berthon and Berthon discuss in their paper, the Internet has brought a remarkable makeover to the existing structure of how distribution channels work. In the beginning of the paper, they provide a brief introduction of distribution channels and their essential purposes,
 To support economies of scope
 To routinize transactions
 To search for information essential to both producer and consumer
Further, the paper provides a substantial account on the significant changes brought by the Internet and World Wide Web to the distribution channel structure. The paper summarizes the following points,
 Brief background of the traditional distribution channels including conventional intermediaries
 New technological changes in the distribution structure revolutionized by the Internet and World Wide Web
 Detailed discussion of the changes brought by the Internet-enabled distribution strategy along with its long-term effects
Pitt, Berthon and Berthon suggest that an Internet Distribution Matrix model can be developed in order to identify which traditional channels will undergo required transformation or die out and where new channels will emerge. The objective of the matrix model is to bring more efficiency to the functioning of distribution channels by existing firms and entrepreneurs. Besides, the matrix model enables companies to stay ahead of competitors while changing the rules of the marketplace.