Starbucks Full Distribution Channel

Read about Starbuck’s commitment to helping out indigenous farmers in underdeveloped countries. (www.starbucks.com). After reading, write up your interpretation of the full distribution channel – from beans in the field to the finished cup of coffee you enjoy at your local Starbucks.

A distribution channel is the path that goods and services travel from the vendor until it reaches the consumer. It can be short and direct or it may several different intermediaries such as wholesalers, distributers, retailers and other agents. Each one of these intermediaries will receive the good or service at a different pricing point that will move up until the good reaches the final buyer. In Starbucks case, before reaching its final consumer in their shop, the coffee goes through a distribution channel that involves farmer, exporter, importer, distributor and retailer.

Some growers were able to maximize their revenues by selling directly to roasters or through a relatively small number of efficient intermediaries, while other growers’ coffee passed through as many as four intermediaries. Starbucks requires samples of coffee prior to loading of shipments. This “preship” sample is sent to the company where it was evaluated, roasted, and cupped to ensure the quality met Starbucks’ standards and expectations. After testing the coffee and importing it, the coffee is processed, packaged and stored in distribution centers and then picked to fill store orders where it is sold under their own brand name in their own stores. The process ends at the store when the final coffee is delivered to the customer. In order to complete this process, Starbucks depends in outside brokers and its direct contact with exporters for the supply of coffee. Channel members are part of a “Dependent channel arrangement” and Starbucks operates its own distribution system.

In February 1998, the first memorandum of understanding (MOU) was signed for a pilot sourcing program. Starbucks agreed to go to...