Distribution means an arrangement that is responsible for the percolation of goods and services from the producers to the consumers with reference to time, place, and price and ownership dimensions. Distribution does not mean merely packing the goods and dispatching them. It is the actual placing of goods in the hands of final user or the commercial user at right place, time and price. The system of distribution can be compared to the system of blood circulation where the blood flows from heart to different limbs of the body through the arteries and veins.
Significance of distribution:
The significance of a well developed distribution system in any country’s economy, can not be underestimated. It has its own place in the economy of a nation. Its importance can be traced in terms of the following points which are outlined:
1. Human wants are satisfied
Human life is patent example of mutual interdependence. He needs countless things which are produced or manufactured in different parts of the country or the world. Mere production has no meaning unless they are brought to the door-steps of a consumer in need. It is distribution which gives meaning to the production.
2. Economies of large
Scale productions- It is because the economy has a network of distribution system that very idea of large scale production is fully supported. That is, it is the demand that follows supply instead of supply following the demand. That is, production is an anticipation of demand and is carried on mass-scale. The result is such an uninterrupted on going production makes possible larger production, cheaper production and better production. The benefits of large-scale production are transmitted to the millions through invisible hands of distribution. In absence of distribution, the things-would have been much costlier, and would have been in limited quantities and even the quality would not have improved so much as production would have taken place as personality orders.
3. Price stabilization
The greatest problem of every Government is price stabilization only next to unemployment. As production takes place in different parts of the country and the world has a highly specialized activity, it is the distribution that adjust the demand and supply prices for each commodity or production services by creating time, place and possession utilities. A kind of balance is maintained thus, avoiding the unwanted extremes. Thus, some goods are produced in a particular season but demand is spread through out the year and vice versa. The places where the goods are produced, they may not be needed, these goods are moved to those places where they are needed most; the producers do not hold them longer, hence it is the wholesalers and retailers who hold them from the time of production to the time of their consumption. This concurrent interaction of demand and supply forces results in price stabilization.
4. Vagaries of shortages are fought
At times; shortages- artificial and natural are experienced. Artificial scarcity conditions are the result of bad intentions of getting rich over-night by the greedy trading community and resorting to hoarding and black-marketing. On the other hand, natural factors cause long-term shortages. Shortage of rains cause famines; earthquake, fire, floods and other natural calamities cause stoppage of production of goods and services. Under these condition of acute shortages, it is distribution that makes possible to make human life continue and comfortable, today, African countries are getting their food in spite of the acute condition of famine. The artificial scarcity conditions are broken as soon as fresh stock arrives in the market which is our common experience during the days of strikes and other political disturbances.
5. A major source of employment
Distribution as the counter part of production creates, maintains and extends good many employment opportunities- both directly and indirectly. In absence of distribution system many more might have been unemployed and underemployed thus, adding to the economic and social arises. Today, roughly, 45 percent of the total employment opportunities can be attributed to the distribution system in various capacities- as marketing managers, sales-supervisors, salesmen, traders, advertisers, transport-agencies, warehousing-agencies, insurance and so on. Millions are made capable of enjoying a decent standard of living mainly due to the gainful employment opportunities. Distribution has given birth to so many other allied lines of activities such as communication, transport, risk-bearing, financing, standardization, grading, branding, packing and packaging and so on.
6. An agent of change
Distribution is true agent of change in various walks of human life and living. It is distribution that brings about interaction of people, their culture leading to progress and prosperity of both individuals and the society and the nation in the final analysis. The producers and manufacturers get clear cut idea about future plans of production and hence distribution as the system provides the necessary feed-back to the manufacturers and producers as to what are the expectations and aspirations of the consumers. It is the consumer satisfaction that lays the foundation for producers’ profit. Thus, it acts like a stethoscope to feel the pulse of the economy and act accordingly in his own interest.