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Distribution Management CHAPTER 4

1) Wholesalers purchase goods in bulk from manufacturers and resell them in smaller quantities to retailers. 2) Wholesalers perform key functions like storage, transportation, financing, market information dissemination, and risk bearing for manufacturers and retailers. 3) Wholesalers can be classified by their specialization (general merchandise, specialty), area of operation (local, national, international), or the products they handle (general line, manufacturer). Major decisions include markets, employees, products, pricing, and image.

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Marielle Dauz
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98 views

Distribution Management CHAPTER 4

1) Wholesalers purchase goods in bulk from manufacturers and resell them in smaller quantities to retailers. 2) Wholesalers perform key functions like storage, transportation, financing, market information dissemination, and risk bearing for manufacturers and retailers. 3) Wholesalers can be classified by their specialization (general merchandise, specialty), area of operation (local, national, international), or the products they handle (general line, manufacturer). Major decisions include markets, employees, products, pricing, and image.

Uploaded by

Marielle Dauz
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We take content rights seriously. If you suspect this is your content, claim it here.
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CHAPTER IV: CHANNEL INSTITUTION

WHOLESALING

Group 3
INTRODUCTION

Wholesaling system
- Operating through well-established freelance wholesalers in the market who
work with dozens of companies.
- Operating with distributors, stockists and agents who have been contracted by
the company to work for it.
DEFINITION OF A WHOLESALER

• Wholesalers buy and resell merchandise • A person or firm that buys merchandise and
to retailers and other merchants and to resells it either to retailers for subsequent
industrial, institutional and commercial resale to the consumer or to a business firm
users, but do not sell in significant for industrial and business use is called a
amounts to ultimate consumers.. wholesaler.. ~Mason & Rath
~Cundiff & Still
• Wholesaling is concerned with the activities
• The wholesaler, or the wholesale trader, is
of those persons or establishments that sell
a trader, who purchases goods in large
.to retailers and other merchants, and/ or
quantities from manufacturers and resells
industrial, institutional, and commercial users,
to retailers in small quantities
but that do not sell in large amounts to final
~ E Thomas consumers ~ US Bureau of Census
FUNCTIONS OF WHOLESALERS

• Sales and promotion of chosen company products


• Buying the assortment of goods to be handled
• Breaking bulk to suit customer requirements
• Storage and protection of the goods till they are sold out
• Grading and packing of goods like commodities
• Transportation of the goods to the customers
• Financing the buying of the goods and extension of credit to the customers
• Bearing the risks associated with the business
• Collecting and disseminating market information to suppliers and customers
• Assembling of Goods • Transporting
- Wholesalers provide facilities for transportation
- Purchases different varieties of goods of goods from the producers to his own go
from different manufacturers down.
• Breaking in the ‘Bulk’ • Financing
- Wholesalers finance the manufacturer by giving
- Purchases goods in bulk from the them advance money with order or by purchasing
producers and sells them in small large quantity of goods on cash basis and the
quantities to the retailers. retailers by granting credit to them.

• Warehousing or Storing
- A wholesaler keeps a large stock of
goods for retailers.
TYPES OF WHOLESALERS

• Manufacturer Wholesaler • Pure Wholesalers • Assemblers


- They do not engage in - Another type of middle men.
- They usually do not deal in goods production or direct sale to the
manufactured by other firms. Engaged mainly in the
consumers. marketing of agricultural
produce.
• Retail Wholesalers
• Agents and Brokers • Merchant Wholesalers
- Beside selling goods to the - They receive commission from - Undertakes no business other
retailers they also deal directly with the manufacturer for the work than the wholesale one.
the ultimate cobsumers. done by them.
ACCORDING TO SPECIALIZATION

• General Merchandise • General Line • Specialty


Wholesalers Wholesalers Wholesalers
- They are a boon to the - They do not deal with a - They specialize
small retailers who can variety of products. They themselves in limited items
easily purchase their select a particular line such of merchandise.
requirements on credit anf as groceries, drugs,
pay for them when the sale appliances etc.
proceeds are released.
ACCORDING TO THE AREA OF
OPERATION

• Local Wholesaler • National Wholesaler


- They sells goods to local - Have their network
retailers. throughout the country.
• Regional or Sectional • International
Wholesaler Wholesaler
- Sells goods to retailers in - Wholesalers dealing only
a certain section. in export trade collect
goods from manufacturers
in the country and then
export these goods to
foreign countries.
MAJOR WHOLESALING DECISIONS

• Which markets to operate in


• Manpower to employ
• What products to sell
• Pricing decisions / Promotional support
• Credit and collections
• Image and customer perception
• Warehouse location and design
LIMITATIONS OF WHOLESALERS

• The goods made by the manufacturers are to reach the ultimate users in the
manner intended. As an intermediary, the wholesaler may not at times (during
product shortages) give the correct information to the manufacturer or the
retailers/ institutional customers. Many a times the wholesaler (including a
distributor) may not ensure equitable distribution of the goods. Wholesalers in
textiles and paper industry (like guarantors) do not like the manufacturers and
customers to ever meet – they like to keep them apart,

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