Strategy in Distribution
AOS may exploit two distributions strategies. These are; establishing one stop shops for products or relying on independent American distributors to introduce its product into the United States market.
One Stop Shops for AOS Products (Manufacturer- Customer)
Due to the nature of AOS products it is possible for the company to establish one stop shop which will avail the products to consumers. The first shop may be established on San Francisco where the company plans to initiate its operations (Robinson & Satterfield, 1998). One stop shops have their own advantages and disadvantages. The first advantage is that the company will remain in charge of its operations, services and products. Since the company will be in direct contact with the final consumer, the company will get to decide how they would like the clients to perceive the company and the company’s product. One stop shop will ensure that company services are well integrated, consistent and standardized. This is unlike when the company relies on vendors and distributors. One stop shop will also ensure that clients encounter product specialist who will be able to meet their needs. This is unlike when the clients have to deal with vendors. This will also enhance customer satisfaction.
The biggest disadvantage of using a one stop shop as a distribution channel is that, this approach will require massive initial capital (Robinson & Satterfield, 1998). A lot of capital will be require to start the shopping centers as compared to when the company relies on already established distributors or vendors. One stop shops will also means that the rate of penetration of AOS product into the US market will be slow. Use of One stop shops may also disadvantage AOS since the company has little experience with the American market.
Selling through Distributors (Manufacturer- Distributor- Customer)
AOS may also penetrate the United States market by using distributors. The company will have various advantages when it opts to use this approach. First of all, this approach will ensure faster penetration of the market (Robinson & Satterfield, 1998). This is so applicable, especially if we consider that AOS has an existing relationship with several American companies as a result of acting as their Australian distributor. These companies will not be adamant to reciprocate by acting as AOS distributors in the American market. AOS will also incur minimal initial cost when it decides to make use of distributors. Another advantage is that the distributors will have an advantage in selling the product since they have a deeper understanding of this market because of their experiences. Since the company product will be entirely in the distributors hands, AOL will also enjoy reduced logistic issues and trade related risks.
However, there are various disadvantages associated with the use of distributors. The biggest is that the company may lose control of its product (Robinson & Satterfield, 1998). When the products enter the distributors hands, the distributor determine everything from there. This means that it is the distributors who will decide how the product is perceived in the market. There will also be loss of consistency when distributors are involved. This will especially be so if AOL decides to use different distributors. Each distributor will definitely have its way of operation which is different from the other, a circumstance that will result in reduced standardization. Using distributors may also increase the prices of the product since AOS and the distributors must earn returns. This means that the products will be marked up twice.
References
Robinson P. & Satterfield R. (1998). Designing Distribution Channels to Support Vendor Strategies in Supply Chain Management. Decision Science. 29 (3), 685- 706
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