2/27/2008 12:27:00 PM
Nokia’s new distie world
A buyer at a big retail chain described a utopian vision of distribution this week: ‘We negotiate directly with the manufacturer. They know what we want, we cut a deal, do the invoices directly with them and then get a distributor to pick up the pallets and bring it to us.’
It removes the wheeler-dealer model that has been the basis of distribution for years. And that vision appears to be somewhere in the thoughts of Nokia’s UK team, which is about to shake up distribution through the biggest review it has ever conducted.
Nokia knows it is operating in a different world than it was even two years ago, and it wants the distribution landscape to catch up. In this brave new world for distributors, there will be a complete shift from the sales and marketing structure that currently makes up the businesses, to more of a mechanical operation built on IT systems that execute orders and deliveries.
Phones currently move from warehouse to warehouse - manufacturer, distributor, operator, distributor again and finally to the retailer in some cases. It employs lots of trucks, warehouses and administration. It is terribly inefficient, and way behind the speed and efficiency of other product lines sold by the likes of Tesco, Argos and Woolworths.
So what does Nokia want? Those in the know think just three big handset distributors, which it has a deeper relationship with, and are opening up more channels and cutting costs for it and its retail partners. One thing is for certain; there will not only be changes in the number of distributors, but also how the remaining few operate.