Retail versus Direct Distribution
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The Retail Distribution (Wal-Mart) Model Versus
The Direct, Network Marketing (Nikken) Model
What the company, Nikken, has unquestionably demonstrated is the power of
person-to-person distribution of health products. Nikken, offers Advanced
Wellness Technologies direct to the people. This topic of redefining distribution, it
turns out, has ming-boggling social and commercial implications.
Let's first examine the Wal-Mart model of product distribution.
The "Wal-Mart Model" represents every brick-and-mortar retail establishment that
distributes products. It is what we have traditionally thought of as business as
usual.
In the Wal-Mart Model, there are six key players, each of which has a financial
stake in the sale of products:
1) Product manufacturers
2) Advertisers and marketers
3) Product distributors / wholesalers
4) Product transportation & shipping companies
5) Retail stores
6) Customers
Let's look at how this product distribution model works:
First, the product manufacturer makes a product (a bottle of juice, a bottle of
supplements, etc.) This product might cost 10% of the actual retail price it will
eventually be sold for.
Next, the advertisers and marketers spend millions of dollars running ads in the
popular media in order to create consumer demand for the product. This often
adds 20% (or so) to the product price.
Once this consumer demand is in place, the manufacturers sell it to product
distributors at about 40% of retail price (a 60% discount from the retail price).
From there, the product transportation companies get paid to deliver the product,
in bulk, to retail stores. This typically adds about 5% - 10% to the product price.
The retail stores then buy the product at about 50% - 60% of retail price and put it
on their shelves to be sold at full retail price.
Finally, a consumer enters the store, buys the product and pays retail price.
In this model, if the product costs $100, here's how this money is actually
distributed:
• The manufacturer got $20
• The advertisers got $20
• The distributor got $10
• The transportation company got $10
• The retailer got $40
As you can see, your $100 in cash spent at the health food store effectively pays
out commissions to all the various players in this distribution chain.
You may also recognize the interesting fact that, since there are thousands of
health retailers serving millions of customers around the world, this distribution
model is a network marketing model, too!
Every time a consumer buys the $100 product, for example, the distributor earns a
10% commission, the retailer earns a 40% commission, the manufacturer earns
10% as profit, etc.
How the Direct Distribution Model compares.
In a direct distribution model, the advertisers, distributors, transportation
companies and retailers are all eliminated!
They are replaced with a human network of individuals who serve those same
functions: Advertising, distributing, retailing, enrolling, etc. Just like in the above
example, retail sales that occur in this network generate commissions for the
people who brought you the product. Except that in the case of network marketing,
it's really the People -- a network of individuals -- rather than a handful of
corporations who earn the commissions.
In essence, then: The direct sales model is a more Democratic, decentralized
model of product distribution that distributes economic benefits to the People
rather than concentrating them in the hands of a few corporations.
Where the retail distribution model creates profits for the few, direct sales
distributes those same profits (markups) to the many (distributors).
Key differences between Direct Distribution vs. Conventional
Retail
Here are other key differences between the two models:
• The Wal-Mart model economically benefits a few rich corporations.
• The Direct Sales model economically benefits a large network of People.
• The Wal-Mart model traps wage-slave employees in a system of low wages.
• The Direct Sales model shatters the glass ceiling and creates the potential for
unlimited earnings, regardless of education, race, or work experience.
• The Wal-Mart model wastes resources on needless inventory sitting on shelves
in a massive network of local warehouses.
• The Direct Sales model delivers products to people as needed, bypassing local
warehouses and avoiding the cost and waste of needless real estate.
• The Wal-Mart model enriches advertising executives, television networks and
mainstream advertising outlets (think: soda ads).
• The Direct Sales model enriches the people doing the work, spreading the word
about intriguing, life-enhancing products.
• The Wal-Mart model encourages the formulation of cheap, low-cost products
with high markup.
• The Direct Sales model makes possible the direct sales of high-quality products
with a much lower profit margin.
• The Wal-Mart model disempowers the People, giving them no voice in the
product or the company (unless you are a wealthy shareholder)
• The Direct Sales model empowers the People, giving them a powerful voice in
the future of the company: Its products, formulations, policies, etc.
• The Wal-Mart model focuses on the lowest price, regardless of environmental
concerns, sweatshop labor or other ethical considerations.
• The Direct Sales model demands accountability due to the combined voice of the
large number of individual distributors whom the company must keep happy.
• The Wal-Mart model is considered successful when the people SPEND more
money (weakens household finances).
• The Direct Sales model is considered successful when the People EARN more
money (strengthens household finances).
• The Wal-Mart model treats customers like cattle: Nameless, faceless Joe Public
consumers who shuffle through security detectors, monitored by video cameras
and secret anti-shoplifting agents.
• The Direct Sales model treats people like real people. It's a face-to-face business
built on strong relationships and genuine trust (if you choose the right organization
like Nikken).
• The goal of the Wal-Mart model is to take your money and get you out of the
store as quickly as possible.
• The goal of the Direct Sales model is to show you how to MAKE money as
quickly as possible.
In essence, the Wal-Mart model is about centralized control.
The Direct Sales model, in contrast, is about individual freedom.
Network Marketing distributes power among the People.
When I first got all this, it was a stunning realization. The Direct Sales model of
product distribution and compensation represents a mass Democratization of
power and profits. When done with integrity (with real products that offer real
value at reasonable prices), it is nothing short of revolutionary.
We are talking about a system here that completely bypasses the centralized,
power-hungry, mega-wealthy corporations that traditionally funnel all the profits
into their own pockets, often while selling harmful (sometimes even deadly)
products to consumers for a quick buck.
That model, I believe, is in many ways hopelessly outdated and socially lopsided.
Network Marketing is more efficient and uses fewer resources.
The Direct Sales approach to product distribution uses far fewer resources to get
the same job done (the job of distributing products into the hands of those who
value them and benefit from them).
In the Wal-Mart model, hundreds of millions of dollars must be spent to buy land,
build retail buildings, hire employees, stock inventory, advertise in local
newspapers, and so on. These are real resources being wasted: Land,
commercial real estate, concrete, paper, etc. And they're entirely unnecessary,
because in the Direct Sales model, all this waste is easily avoided.
This has serious implications for sustainable living and environmental
stewardship. The Wal-Mart model, most people have come to recognize, is
environmentally non-sustainable. But the Direct Sales model is not merely
sustainable; it is efficient! By relying on the People to do the job of a typical retail
store, enormous real-world resources are conserved. The eco-footprint of the
Direct Sales model, in other words, is vastly superior to the Wal-Mart model.
It doesn't mean Wal-Mart has no useful role in society, of course. People will
always need cheap plastic spatulas, AA batteries and contact lens solution.
They're not likely to buy these through a Direct Sales organization, and they need
the convenience of having such products stocked locally on physical shelves.
Convenience stores will always have a place, but for many products, they are
remarkably wasteful and disadvantageous to the people.
Product acceptance and market penetration
In marketing schools, the term "market penetration" describes the percentage of
the target market that has embraced your product. If you sell disposable razors for
men, for example, and 4% of the men in the country buy your razors, you have
achieved a market penetration of 4%.
Perhaps the greatest challenge for any product manufacturer is to achieve some
degree of market penetration. For the big consumer product corporations in the
world, that means running endless television ads that try to convince people their
virtually-useless products need to be purchased again and again, at ridiculously-
high markups (like cleaning products, or most pharmaceuticals).
The conventional retail model of product penetration relies on advertising to
imprint logos, packaging designs and product names into the heads of consumers.
This is accomplished through various propaganda techniques, including song
jingles, implied sex appeal (beer ads), a hidden promise of social acceptance
(soda ads, sports shoes, etc.) or even empty promises of health (drug ads). All
these promises of course, are really just clever and entertaining ads.
The cost of such propaganda campaigns is so high that the amount of money left
to put into the product itself is often shockingly low. A $1.00 can of soda, for
example, contains about three cents worth of actual ingredients. Some
prescription drugs, as another example, are literally marked up 565,000% over the
cost of their ingredients. The conventional retail / advertising approach to product
penetration is a tremendous waste of resources, and it results in extremely low-
cost products being sold to consumers at ridiculously high prices.
The Direct Sales model is vastly superior to this because, by avoiding all the
overhead of advertising, public relations and costly propaganda campaigns, Direct
Sales companies are capable of bringing high-value products directly to
consumers at reasonable markups. The money traditionally spent on advertising
gets redistributed to People.
Even more importantly, the Direct Sales model is capable of achieving impressive
market penetration without the need for organized advertising campaigns. Why is
this? Because the viral nature of face-to-face product demonstrations and
distributor enrollment has the potential to reach every single person in society...
even without a single dollar being spent on national advertising. Look what is done
these days with online videos, they can go viral overnight.
This is socially important because it allows people to learn about important health
products they might otherwise never discover. The FDA, you see, is engaged in a
campaign of routine health product censorship. It has outlawed scientifically-
supported health claims on all health products, and it has gone to great lengths to
disrupt, oppress or otherwise destroy the natural products industry. It is ridiculous
that making a claim that an orange can prevent scurvy is technically illegal
because you are making a medical claim without double blind studies. If one really
thinks about it, most chemotherapy drugs for example have yet to undergo such
testing.
Thus, if left to traditional product advertising, marketing and fulfillment channels,
many genuinely miraculous health products would never see the light of day. The
Direct Sales industry enables many critically-important health products to actually
get into the hands of the people who need them most to regain their health.
Through Direct Sales organizations, people have real access to lifesaving herbs,
supplements and health products that the pro-Pharma establishment would prefer
to see outlawed entirely. This is one reason, by the way, why the FTC and FDA
have both attacked Direct Sales companies so aggressively over the years: It's a
product distribution channel they cannot control, and they absolutely hate the fact
that two people can sit in a room and privately discuss the truth about anti-cancer
herbs or products, for example, in a way that cannot be censored or regulated by
the government.
This is why Direct Sales organizations are, in one sense, a kind of underground
railroad of information: They allow people to pass along lifesaving information
about natural remedies that they would never learn through traditional, tightly-
controlled information sources (network news, newspapers, magazines, etc.).
The social implications for this are nothing short of huge: People who are involved
in health-related Direct Sales organizations are more knowledgeable about natural
remedies than those who are not. That's because they're plugged in to a channel
of word-of-mouth information that is currently censored in traditional information
sources.
The upshot of all this is that Direct Sales organizations provide not only an
alternative channel for physical product distribution, but also an alternative
channel for knowledge distribution. In a very real sense, network marketing
distributors are passing along the truth about health products like ancient
storytellers would hand down important cultural knowledge from one generation to
the next. The active people in Direct Sales today are the ones keeping alive the
endangered knowledge that the FDA would just as soon wipe clean from our
minds.
There are many books written on the topics covered here. As someone who was
blasted with cancer in 1996, I am grateful for the openness and availability of
information today. I have seen the world transform in it's acceptance of
alternatives and the choices offered patients. Continue to learn what you can. I
have always believed that with knowledge we become empowered. Empowered to
live healthier, wealthier, and more fulfilled lives!
Personal freedom vs. the wage slave workers
Another important social implication of the wave of Direct Sales companies is that
they are showing people how to successfully build their own income streams and
not be solely dependent on a JOB that can be gone tomorrow.
The is especially important in these times of global financial crisis: Peoples'
paychecks are in danger. The majority of U.S. cities and states, for example, are
now facing monetary shortfall. Paychecks, pensions and health benefits are all
endangered, and that means the livelihoods of those who depends on such
paychecks are also potentially in danger.
Thanks to the global financial wipeout of 2008, and the realization that banks,
governments and even well-known corporations are often skating on thin ice,
there's a resurgence of interest in how to create your own income, independent of
any fixed paycheck. Network Distribution is seeing a dramatic increase in inquiries.
For many people, the presumed reliability of a steady paycheck from a "solid"
institution is suddenly being revealed as illusion. Reliable income, more people are
realizing, does not come from a paycheck that can be taken away from you at any
time; it comes from owning and controlling your own income, using independent
sources. In this way, Direct Sales organizations are vastly superior to almost any
job, unless you happen to hold a key position (board member, for example) of the
corporation providing your paycheck.
Your paycheck in traditional jobs can also be limited by unfair considerations: Your
age, skin color, speaking style, sexual orientation, marriage status, parental
status, education, background, religion, style of dress, etc. While job
discrimination based on these criteria are illegal, how many stories have we heard
of people who have been subjected to such discrimination.
In Direct Sales, nobody can keep you chained to poverty, and nobody can fire
you. Your income is entirely up to you, and once you build it, it's yours to keep,
month after month, year after year. You OWN the income stream, and it cannot be
suddenly taken away from you.
That's real financial security. It's also one of the reasons many people are now
joining network marketing companies. They are achieving income diversity by
representing and offering products or services they feel aligned with. By doing so,
they are creating income streams that they own and control.
Consumers will always need health products, of course, and a network marketing
distribution system will survive a currency collapse that might bring down a bank
or even a government. Worldwide based companies also offer a stability unlike
anything else. Nikken, for example operates in over 35 countries.
In essence, building a successful Direct Sales distributorship sets you free! It frees
you from the cage of depending on a steady paycheck from an organization you
can neither trust, nor rely on to provide for your financial future. In a Direct Sales
organization, you are building a pathway to your own personal freedom. Of
course, choosing the right Direct Sales organization is crucial to achieving your
own, personal financial success.
Success or failure at network marketing.
I've heard people say that "most people don't succeed at network marketing."
That's a funny frame of reference, because if you're talking about making money,
then nobody succeeds at the traditional retail distribution model.
I've never met anyone who got paid to shop at Wal-Mart. I've never seen someone
go to a health food store, buy a bag full of products, and have the cashier hand
THEM a few hundred dollars on the way out!
Thus, by the definition of "success," the traditional retail distribution model has a
zero percent success rate.
In contrast to that, millions of people are earning real money in Direct Sales
organizations. Most earn only a little. Some earn a few thousand dollars a month,
and a few of the hardest-working folks earn as much as six figures a month.
Even those who aren't earning the huge checks are still winning by having access
to life-enhancing health products. There are health products offered by network
marketing companies are truly impressive. If these Direct Sales companies didn't
exist, consumers would have no access to these vastly superior products... at any
price!
Compared to traditional retail distribution, the Direct Sales model makes
everybody a winner: The consumer benefits from access to the unique product
line, the distributor earns an income by introducing people to the product, and
society benefits as a whole by eliminating the waste overhead of competing retail
operations (inventory, advertising, etc.). There are no losers in this equation.
Unless, of course, the product is garbage. That's why choosing a Direct Sales
company that operates with integrity is so important. That is why I chose Nikken.
Peg Johnson is an Independent NIKKEN Wellness Consultant.
Contact her by email: wellness@treasuredhavenfarm.com
Contact her by phone:
320-358-3581 home
Thanks and Have a wonderfully blessed day!
The information on this page was compiled from many sources including Natural News, Natural Cures, and other publications or books.
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