B2b Supply Chain Vs. B2c

Historical evidence tells us that music has existed for thousands of years. It wasn’t until 1877 that “Thomas Edison made the first recording of a human voice ("Mary had a little lamb") on the first tinfoil cylinder phonograph” (Recording Technology History, 2005). This invention opened a can of worms for music lovers and it has only gotten better for the end listener. Within the past 8 years there has been a huge shift for the “Brick and Mortar” commerce. The purpose of this essay is to describe the supply chain of music media when in a “Brick and Mortar” environment and how web sites have modified the supply chain.

As time progressed after the first recording of a human voice was performed, again Thomas Edison developed the first marketable music media that was known as the "Gold Molded" cylinders. Since this invention, the physical media has evolved drastically, eventually and not until fairly recently, marketable in a non-physical file format. This new non-physical file format is responsible for the huge shifts in the retail “Brick and Mortar” business environment.

Before there were p2p-shared networks and web sites, “Brick and Mortar” companies that sell music in the form of CD’s and Cassettes would use the standard supply chain shipping process. By definition, “the supply chain represents the flow of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer” (Performance Management, 2005). An example of a “Brick and Mortar” business that sells CD’s and Cassettes would be The Wherehouse. The Wherehouse has contracts with various Wholesale companies who sell music products to The Wherehouse. These Wholesale companies purchase their music from the Manufacturer who purchases their products from the Music recorders.

As outlined above, the supply chain for The Wherehouse is a very lengthy process and the cost of the product plus overhead must be passed onto the customer. Often time’s people don’t understand why it cost so much to purchase a cd. The reality is that the “Brick and Mortar” music companies need to make a profit and the only way this can be done is by marking up the price enough to make a profit to keep them in the business. Competition is another issue that can affect the price of the cd purchased from The Wherehouse. Larger “Brick and Mortar” music reselling companies like Best Buy, Wal-Mart, and Target do not need to make a huge profit off of their cd sales since their main source of revenue does not come from music products. These companies will buy their products in bulk at cheaper cost and pass the savings of the bulk purchase onto the customer. Again, not good a good situation for The Wherehouse.

It’s obvious that The Wherehouse knew that competition and overhead cost would always exist in the music reselling business. What did not exist when they started up were the Internet and the wide distribution of music in the form of MP3. The Internet is a network of computer networks, which operates worldwide using a common set of communications protocols. An MP3 is a MPEG Audio Layer III file. “It is a standard for audio compression that makes any music file smaller with little or no loss of sound quality” (The History of the MP3, 2006). So what are the importance of the Internet and the distribution of the MP3, and how has this affected the “Brick and Mortar” companies?

The development of the Internet introduced a new method