I get a new product on the shelf by the second type of slotting fees i.e. Wareho
ID: 373764 • Letter: I
Question
I get a new product on the shelf by the second type of slotting fees i.e. Warehouse slotting fee. Here I pay them to get the product stocked in the warehouse and then I send salespeople to talk to store managers and talk them into ordering your product from the warehouse.
The Amazon has altered distribution strategy by the following ways:
The Amazon has the distribution strategy as to make the Whole Foods as a distribution hub and they have their presence in the physical retail. They have another strategy to makes the small groceries and retail come closer. According to the Editors of Wall Street Journal, Amazon did not only buy the Whole Foods grocery stores but also the 431-upper income, prime location distribution nodes for everything what they do.
Explanation / Answer
How do you get a new product on the shelf? There are normally 2 types of slotting fees.
1.) Paying a store to put the product on the shelf. A column of shelf space is called a facing. For each facing you pay the retailer a fee to have it on the shelf for 6 months. For most of them, if the product has enough turns (inventory turns), e.g. Walmart minimum 28 turns- the facing sells out more than every 2 weeks, they will leave it on the shelf and keep your money. If it does not have enough turns, they pull the product and keep your money.
2.) Warehouse slotting fee. Here you pay them to get the product stocked in the warehouse and then you send salespeople to talk to store managers and talk them into ordering your product from the warehouse.
The question I pose is how has Amazon altered distribution strategy? Think of Amazon.com, but also remember, Amazon just bought Whole Foods. How does this now fit into a distribution strategy?
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