Reference no: EM131385158

Country Supply
An Effective Distribution Strategy
Scott Mooney built his business for customers like himself. He wanted supplies for his horse, he wanted the very best price, and he wanted those supplies right away. Mooney started out selling horse tack to people in his small Iowa town, but he knew the town offered a limited customer base.

For his business to grow, he needed to reach customers outside his geographic area. That meant sending out a catalog. Catalogs are an important contributor to retail sales in the United States. In 2006, U.S. catalog purchases topped $160 billion, a figure which represents a compound annual growth rate of about 6 percent over a five-year period. Consumers accounted for a whopping $96 billion of that total. Establishing a successful catalog, however, takes a tremendous amount of work.

Unlike traditional retail, where customers visit a store to make a purchase, the catalog channel requires the additional expenses of printing and mailing the catalog and packing and shipping the products. Costs need to be lower in other areas of the business to offset the increased expenses. So Mooney sought out lowcost suppliers who offered products he knew would sell. He found a friend of the family to print the catalog for him for free until he made some money. Printing a catalog and stocking a warehouse are useless without a mailing list of potential customers.

To build his list, Mooney scoured newspapers, magazines, and phone books for names and addresses of people involved with horses; he then made mailing labels on the local library's copy machine. He scrounged packing boxes from his local supermarket to ship his supplies. The first headquarters of Country Supply was a small barn on his parents' property, where Mooney stored and managed his inventory. He shipped orders as soon as he could, to be certain his new mail-order customers would have their purchases within a few days.

Mooney was a typical entrepreneur in that he recognized an opportunity and took some risks to build a business around that opportunity. He was atypical in that he was only 14 years old when he started his venture. Mooney started very small, appealed to a customer base of like-minded people, shoved all his profits into growing that business, and did all of the work himself. Country Supply provides a stellar example of a very lean supply chain management system. Before you answer the questions and work the activities, watch the video on Country Supply. You may also want to review the video spotlight that introduced.

Questions
1. Based on what you saw in the videos, describe Country Supply's initial channel of distribution. Why do you think customers continue to choose Country Supply as an intermediary?

2. How did Mooney differentiate his distribution system so as to be successful in satisfying customer needs? How do you think that helped Mooney sustain his competitive advantage? What else do you see in the video that shows how Mooney strives to sustain competitive advantage?

Activities
1. In the video, you learned that Scott Mooney decided at a young age to sell horse supplies because those were the products he needed himself and horses were something he found endlessly interesting. What did you find endlessly interesting at the age of 14? Go back in time and have your 14-year-old self build a business around one of your hobbies or interests. Write an outline describing which product you'd like to sell, who your customers would be, what channels you would use, etc. Share your ideas with your classmates.

2. In the video, Mooney does not mention the Internet as one of his distribution channels. Country Supply does operate a website, however. Visit https://www. countrysupply.com and write down any examples of competitive advantage you find on the site. Then search using the keywords "horse tack" or "horse supplies" on Google or Yahoo! Visit the websites of some of Country Supply's competitors, and compare their Internet presence to that of Country Supply. What evidence of competitive advantage did you find on their sites?