HOW EFFECTIVE IS THE DISTRIBUTION CHANNEL?
oods pass through many different stages within the distribution channel before it reaches the end consumer. This starts with the manufacturing of the product. Most
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retailers will manufacture goods in developing countries such as Bangladesh or China, this is because it means the product is much cheaper to produce, with the few such as ourselves, at Boohoo, who also manufacture in the same country as the retailer themselves. After this the goods are sent to a central distribution centre to be stocked for the customer in order to then go to a courier warehouse or a wholesaler who store them in bulk in cases where the product is made abroad before being sent the distribution centre. Intermediaries take product between the different locations and are necessary in the channel to get things to their destination, however sometimes can cause delays and therefore unhappy consumers. Once the goods reach a retailers warehouse they are re-packaged according to where they need to go e.g. delivery or to a bricks and mortar store, however time could be saved if goods did not need to be un wrapped and then re-packaged but only packed up once at the manufacturer. This would also mean less waste which would be better for the environment.
The distribution system doesn’t tend to have an impact on the consumer as most aren’t aware of what it consists of. Our customers at Boohoo are our most valued stakeholders as without their business we wouldn’t be successful, we do our best to provide them with the latest trends and rewards such as student discounts and sales, as these are some ways of retaining their loyalty. Because of who our customer base consists of, most aren’t affected by the stories you hear, about long hours that workers do in factories in developing countries and how their products are manufactured. The majority are students looking for affordable, on trend clothes and don’t care how they were made. However there are the minority who care about if the clothes were made ethically and if they heard that a retailer they shopped at produced clothes that weren’t made in acceptable conditions they would take their business elsewhere.
consumer will receive their order much quicker meaning they are satisfied with the customer service provided and there is more chance of them buying Boohoo goods in the future. It also means costs are reduced majorly as there is not the great distance to travel from china and no shipping expenses. Additionally to this manufacturing in the UK is more ethical as there are strict laws regarding working conditions and factory conditions, not only this but workers will also get paid an acceptable wage and work legal hours. Manufacturing here means that instead of having labels that say ‘made in china’ Boohoo has some British heritage lessening the reputation that we have for our clothes being ‘tacky’.
However in contrary to this, we have to produce some of our products in China to keep costs down as Boohoo are a brand that produce goods of a lower price, therefore we do not have the funds to produce everything in the UK. There are advantages to trading with China as the labour costs are cheap, as is shipping. Manufacturing in China is good for meeting the demands of consumers to produce cheap, on trend clothes. However it is unethical. Most factories pay workers a couple of pounds a day and are known as ‘sweatshops’. There are many fires that happen in these factories due to owners not complying with the law. Many factors that contribute to these fires are: Making workers exceed the maximum amount of hours that should be worked per day, this means that machines will overheat and spark which can be the cause of a fire. Another is that health and safety isn’t taken into consideration and they cram as many machines and workers into one room as possible. These fires have meant that retailers producing in the factories have been exposed and the majority do not take responsibility. This is the reason that Boohoo now make 50% of our product in the UK as it is becoming more unethical to manufacture abroad.
There are many benefits of manufacturing in the UK and here at Boohoo we see them in action as one of our factories is in Leicester. It means after the production stage is finished there is only a short distance for the goods to travel from the manufacturer to our central distribution warehouse in Manchester. As a result of this the
Our distribution at Boohoo is the most efficient for our business and we continue to build relationships with our customers and provide the best service possible to keep them loyal to the company. It would be more beneficial for us to produce all of our product in the UK as it would be more ethical and reach consumers quicker, but in reality the expenses would be too much taking a huge chunk out of the profit that Boohoo makes.