H-E-B's Distribution

What other businesses or industries do you think would benefit from an international strategy like H-E-B’s?

This could be an effective strategy for any retail business that stocks SKUs in the thousands. Small retailers with only a few stores carrying SKUs in the hundreds may not be able to justify the sunk cost of owning a centralized distribution center and employing couriers to deliver products across multiple store locations. Outside of superstores and supermarkets, large medical device distributors could benefit from this model. Companies such as Medline, McKesson, and Cardinal Health have hundreds of thousands of unique medical devices that they distribute to hospitals worldwide. Utilizing the distribution method that H-E-B deployed in 2004 could serve these organizations for devices that are not emergently needed by their accounts (hospitals).

Explain how the company you currently work for would justify expanding internationally. Would it be to simplify the distribution channel or to grow?

A medical device manufacturer typically expands into foreign markets through distribution organizations. Suppose a company is looking to expand into the Mexican market. In that case, they will interview various distributors, understand what locations they cover and which departments within a hospital they have relationships with, and evaluate who can best grow sales within that country. Once selecting a distributor, they clinically train these sales professionals. The chosen distribution organization will then stock products locally and distribute them across the country however they choose. Typically, this is conducted in a centralized manner, where all product is stored in one location and shipped from that location to whichever account (hospital) purchases the device. Devices are typically transported via air which is quite costly. The distribution organization determines with the account which party pays for shipping.