Question

Mary Jay, an American designer of luxury leather goods, had experienced growth by selling her goods in her own retail stores. As internet usage increased, Mary Jay did what many of her competitors did: she created a virtual online store on her company website. When the Canadian and US dollars were on par, many Canadian shoppers would purchase online through the US website since there were no retailers in Canada carrying Mary Jay goods. Eventually, Mary Jay opened her own retail stores in Canada after considering the risks and advantages of going global. She also created opportunities with major department stores to carry her goods under specific conditions.

1) How many channel levels did Mary Jay have? Explain each channel level.

2) Describe possible conflicts that can arise.

3) What is the most logical way to store and distribute product from the main warehouse in the US to the Canadian customer?

Answer 1

In ancient times people followed subsistence farming. So whatever is required they used to produce everything by themselves. Then slowly they started to produce a specialized product and exchanged with other products. The barter system emerged. Due to the lack of double coincidence of wants, this system became a failure, so the commodity market and at last currencies were invented. It's not easy to sell customers directly. In order to cover more market area, producers sell to customers through intermediaries. This is called channel levels.

1. Mary Jay has two channels.

0 channel - She sells directly to consumers through online. Manufacturer - Customers

1 channel - She sells her products to customers through her sales branch in Canada. Manufacturer - Retail shop- Customers

2 channels - She sends her products to her sales branch. From there it will be distributed to various departmental stores and end customers can buy her products. Manufacturer - her own Retail outlet \ distributer- Departmental store - Customers

2. The virtual online store may not attract many as there is an increased chance of cyber crimes. If Canadian and US dollars are not par, Canadian people may not demand her product. There may be a chance that a new competitor can arise in Canada. As she opens her retail outlet in Canada, she may not be successful if people buy their own products and not her's. The cost of retail business may be high there. There may be a change in the taste and preference of the customers. It may be hard for the retail outlet to sell there. The payment delay made by a departmental store may hinder her business. There may be a chance of heavy tax on foreign outlets.

3. The most logical way to store and distribute product is from US warehouse to her own retail outlet in Canada and from there to Canadian customers. So it will reduce additional separate warehouse cost in Canada.