Assessment of Appropriateness of the Indirect Distribution Channel of Ethio Telecom
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Date
2014-12
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Addis Ababa University
Abstract
Despite its impressive revenue contribution, the indirect channel of Ethio
Telecom is full of administrative problems. In this indirect channel distribution
the company on the one hand employs local distributors which are required to
sell within their respective zone/region territory only and on the other hand
national distributors which are free to circulate the products anywhere in the
country.
The objective of this research is therefore to evaluate appropriateness of the
current indirect channel of ethio telecom and recommend an optimal channel
structure alternative. Accordingly, questionnaires were distributed to three
channel stakeholders namely Ethio Telecom staffs, distributors and retailers.
In a nutshell, performance of the indirect distribution channel based on the
primary data is poor qualitatively. The major poor performance areas are pillar
terms of the distribution agreement (such as door to door distribution, territory
confined distribution of the products) are not implemented, and Channel
stakeholders indicated that it is impossible and not feasible to control territory
confined distribution of ET’s products. It is impossible to avoid territory breach.
Some retailers purchase ET products not from distributors in their territory
which is a best prove of uncontrollability of the policy of territory limited
distribution.
Consequently, the researcher proposed/recommended alternative and optimal
distribution channel design.The recommendation is that ethio telecom needs to
waive the concept of territory limited distribution and employ few mega
national distributors at upstream channel level parallel to the undifferentiated
nature of Ethiopian market. The national distributors would organize
themselves in 14 regional/zonal branch offices parallel to organizational
structure of ethio telecom. Candidate distributors for this proposal are
Ethiopian Postal Service Enterprise and Hidassie Telecom Share Company.
These two candidate and strategic business partners of ethio telecom have
more than one thousand five hundred sales outlets together throughout
Ethiopia.
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Keywords
Indirect Distribution Channel, of Ethio Telecom