Mass Distribution: The Basic Transformation

Transformation in the size and activities of business enterprises came most swiftly in distribution. In the 1840s the traditional merchantile firm, operating much as it had for half a millenium, still marketed and distrib- uted the nation’s goods. Within a generation it was replaced in the sale of agricultural commodities and consumer goods by modern forms of mar- keting enterprises. In the 1850s and 1860s the modern commodity dealer, who purchased directly from the farmer and sold directly to the processor, took over the marketing and distribution of agricultural products. In the same years the full-line, full-service wholesaler began to market most standardized consumer goods. Then in the 1870s and 1880s the modern mass retailer—the department store, the mail-order house, and the chain store—started to make inroads on the wholesaler’s markets.

All these mass marketing enterprises had the same internal administra- tive structure. Their buying and selling organizations, by using the rail- roads, the telegraph, the steamship, and improved postal services, coor- dinated the flow of agricultural crops and finished goods from a great number of individual producers to an even larger number of individual consumers. By means of such administrative coordination, the new mass marketers reduced the number of transactions involved in the flow of goods, increased the speed and regularity of that flow, and so lowered costs and improved the productivity of the American distribution system.

Source: Chandler Alfred D. Jr. (1977), The Visible Hand: The Managerial Revolution in American Business, Harvard University Press.

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