Distribution services, technological change and the evolution of retailing and distribution in the twenty-first century
This overview chapter has two main sections. The first one introduces the concept of distribution services at an intuitive level, provides their rigorous foundations in terms of basic economic concepts as well as their connection to important articles in the economics and marketing literature of the last thirty years. In the second section we rely on these concepts to address a number of fundamental topics for understanding the evolution of retailing in the twenty-first century. These topics include: a rigorous distinction between the retailing of goods and the retailing of services in terms of the profit function; the economic impact of online retailing; the separability of distribution services in online retailing as the basic distinction between online retailing and brick and mortar retailing; the two most important economic consequences of this separability; the role of distribution services in franchise contracts and their implications for the retailing of services; and, finally, why busines format franchises are most usefully viewed as relational contracts. A conclusion relates these ideas to the rise of several novel institutional forms made feasible by modern technology and to the meaning of customization quality in retailing.