RETAIL TRADE

Definition;

-Retail trade is a type of trade which involves buying goods from

wholesalers or manufacturers in large quantities and selling them in
reasonable quantities to the final consumers or users.

-A trader who sells goods to the consumers is known as a Retailer.

FUNCTIONS OF A RETAILER

-In the process of buying from wholesalers or manufacturers and selling

them to the final consumers, retailers perform the following functions;-

a.) Buying goods/purchasing

-A retailer purchases goods from the manufacturers or the wholesalers.

b.) Selling goods

-He sells to consumers, usually in reasonable quantities.

c.) Transportation of goods

-A retailer usually arranges for the transport of goods from the

manufacturer’s place to his/ her premises. At times he may also be called
upon to transport goods to his customers premises.

d.) Storage

-He stores goods till they are wanted by the customers.

e.) Sales promotion

-This involves the art of advertising and displaying goods to be sold to the
consumers.

f.) Marketing survey

-This is also known as market research which a retailer undertakes to know
the kind, quality and quantity of goods consumers want before he actually
buys them.

g.)Stock control and book keeping;

-This work involves the setting up of better system in which purchases can
be planned and kept in reasonable balance with the sales. It also involves
handling records of transaction all the accounting books in order to ensure
proper use of finance, business assets, equipment and premises.

QUALITIES OF A GOOD RETAILER

-The success of a retailer depends on number of factors, the most important

one being his personal qualities. In order to be successful a retailer should
possess the following qualities;

i.) He should be pleasant in his dealing with his customers. He should be

courteous (polite).

ii.) He should be a good buyer.

-He must know what to buy, where to buy from, in what quantities to buy,
when to buy and at what price to buy. His ultimate profit largely depends
on his ability to buy most economically.

iii.) He should be able to forecast the demands of his customers as regards

quality, quantity, price brand, package, etc. He must also be able to
foreseen changes in taste and fashion.

iv.) He should be a good administrator.

-If he fills to control the movement of his stock and other properties or to
keep a check on the activities of his staff, chances of success would be slim.

v.) He should be honest to his customers.

vi.) He should be cooperative to his suppliers and pay them promptly.

ADVANTAGES OF RETAILERS

Retailers have the following advantages;

a.) Retailers are available in almost all residential places. Consumers can
easily obtain services from retailers without being required to walk along
distance.

b.) Retailers offer a wide range of choices

-This is because they buy goods from different producers

c.) Retailers maintain close contact with their customers

-Because of this, retailers assist the consumers in making correct choices of

goods, they demand.

d.) Retailers assist the producers and the wholesalers in their market
research

-Retailers are direct contact with the consumers. They can easily interrupt
and forecast consumers’ needs.

e.) Retailers offer credit facilities to their customers. This enables customize
to maintain their standard of living

SOURCES OF CAPITAL FOR A RETAILER

-A retailer before starting a retail trade, he needs a working capital for

buying goods for sale, capital for buying the fixed assets such as e.g
weighing machines, furniture etc. He can raise capital through the
following ways.

a.) A loan from the bank

-At a reasonable interest rate, you can apply for a loan from the bank if you
have bulky of a goods can act as a security.

b.) Borrowing money from a friend/relative

-A man can borrow money to start a retail trade business from a

friend/relative.

c.) Saving over a long period

-You need a little amount of money per week /month and after a long
period of saving, say 4 years or more, it may be a large sum, say 200,000/=
enough for starting a business.

d.) Admitting somebody as a partner

-Accepting a partner or shareholder of the retail business started.

TYPES OF RETAILERS

1. Small scale retailer

2. Large scale retailer

1. SMALL SCALE RETAILERS

This consist of retailers who operate in small scales

-They have limited capital and thus sell small amount of goods

Example; a.) Street traders

b.) Itinerant traders

c. ) Small fixed shops/single shops

d.) Tied shops

e.) Automatic vending machines

a.)Street traders/road side sellers

These are traders who offer small items like sweets, boxes of matches and
fresh fruits by sitting near bus stops, market place waiting for buyers. In
this case little capital is required in starting these business.

ADVANTAGES OF STREET TRADERS/ROADSIDE TRADERS

1. Their overheads/expenses are too low

2. They sell goods at low prices

3. They need small amount of capital to start a business.

DISADVANTAGES OF STREET TRADERS

1. They have no fixed premises

2. They sell normally defective of inferior quality goods

3. They cannot get regular customers. So their sale fluctuate.

b.)Itinerant traders/mobile traders

These are traders such as peddlers and hawkers who they do not have fixed
premises and carry very little stock. It operates on a minimum of capital
outlay.

The following are example of itinerant traders

Peddlers

-These are itinerant who carry goods on their shoulders and go on foot from
one area to another to sell them.

Hawkers

-These are door to door salesmen who carry their stock on vehicles, these
carry their stock on vehicles, and these carry goods on bicycles and
motorcycles

Market stall holders

-Market stall holders hire at market in the open air during market days .
They travel from one market to another.

Mobile shops

-These are motor vehicle designed as shops selling groceries.

ADVANTAGES OF ITINERANT TRADERS

1. They need small amount of capital to start business

2. This overhead/expenses are too low
3. They have some permanent customers so they can sell their goods
easily.
DISADVANTAGES OF ITINERANT TRADERS

1. It is quite inconvenient to move from one place to another

2. Their sales are affected adversely during rain season
3. They normally sell defective or inferior goods

c.)Small fixed shop/single shops

-These are shops which have fixed premises and are usually owned and run
by one person(a sole trader)

-Unit shops are those shops which are only one shop under one particular
name and they have no branches

ADVANTAGES OF SMALL FIXED SHOPS

1. Overheads/expenses are low

2. Personal contact with customers in possible
3. Credit facilities can be provided to the customers
4. These shops can be operated permanently

DISADVANTAGES OF SMALL FIXED SHOPS

1. There is greater competition because in one area different shops sell

similar goods
2. Some credit customers can disappear without paying the amount due
from them
3. More capital is required to attract more customers by stocking
different types of goods

d.) Tied shops

-A tied shop is a type of single shop which sells products of one

manufacturer only.

-Almost all petrol stations are ‘’tied’’ to one of the few oil companies like
shell, Total, Oilcom, Caltex

e.) Automatic vending machines

-This involves the sale of goods to the final consumer through coin operated
machines
 2. LARGE SCALE RETAILERS

-These retailers have a large capital at their disposal and therefore able to
buy their stock in great quantities and their volume of sales is bigger.

-They operate from well established fixed premises

-Large scale retailers include;

a.)Multiple shops

b.) Departmental stores

c.) Supermarkets

d.)Hypermarkets

e.) Co-operative stores

f.) Mail orders business

a.) Multiple shops or chain stores

-Multiple shops are a number of shops, owned and managed by one

concern found in different places, stocking the same class of goods and
often similar in appearance and price they are characterized by central
management.

-Example of multiple shops in Tanzania is Shoprite.

b.) Departmental stores

It is an organization of several shops or stores carried on under one roof

and owned by one management whereas the stock of each department are
handled separately.
The store is divided into a number of independent departments each of
which stocks only one class of goods and is managed by a departmental
Manager.
Departmental stores maintain their own restaurant,reading rooms, cinema
houses, hair dressing and beauty saloons, information bureau.
Differences between department’s stores and multiple shops

Departmental stores Multiple shops

-In this system there is a large
-Is a collection of shops all under the
number of individual shops
same roof, each department dealing
operating in different parts of the
in a particular branch of retail trade
country
-The whole business is concentrated
-They open a large number of shops
in one unit and the customers are
in various places
drawn to it.
-It specializes in a particular set of
-It deals in wide variety of articles goods especially standardized type of
goods
-It procures goods from different -It makes purchase from a single
sources and sell them at a central shop and sells them from different
place centres.
-Geographical diversification of risk
-Geographical diversification of risk
is possible since it is operating from
is not available.
different centres.
-If certain goods don’t sell well in a
certain area they can be transferred
-Transfer of goods is not possible
to another while they may be sold
easily.
-It requires extensive premises -It does not require large premises.

c.) Supermarkets

Is a large self service store selling a wide variety of consumer's goods

particularly small articles. A common feature of this type of retail business
is ''Self service''. This means that every item carries a price tag, a customer
simply moves through the shop from shelf to shelf picking up any item she
needs then proceeds to exit counters where a cashier lifts all her items from
the trolley and informs customer on the total amount due the customer
then pays.

Advantages of supermarket

1. They offer goods and services at lower prices.

 2. They sell standardized or higher quality goods.
3. They provide source of supply to small scale retailers.
4. They provide wider range of choices by selling varieties of goods.
5. They create employment to a large number of peoples.

Disadvantages of supermarkets

1. There is no personal contact between a buyer and seller

2. Supermarkets can easily face the problem of theft(pilfering) from
dishonest customers
3. Most supermarkets are less accessible to common man

-This is because most supermarkets are located in big cities and at

centres of the cities.

4. Bargaining of price is less applicable.

5. Inconvenience at the counter especially at peak hours.

6. Initial costs and operating costs are so high compared to small scale
retailers

d.) Hypermarkets

-These are large self service stores located away from the town or city
centre

e.) Cooperative society

-These are retail shops owned by members

-Control is done by members who elect among themselves representatives

to manage or run the store

-Sales priorities are given to members than non-members sometimes are

restricted to members only.

f.) Mail order business

-Mail order business is a type of retail trade where the business is done by
post
-In this type of retail trade the customers place their order for goods
through post and the goods are also supplied through the post

-Business depends on getting orders through extensive advertising in

newspapers and house journals and by issuing colorful catalogues and
brochures

Advantages of Mail order Business to the seller

1. It is not necessary to maintain expensive showrooms

2. It is not necessary to maintain huge transport flit
3. The trader need not to employ salesman

-This is because selling and buying are done through post

4. Losses from bad debts do not arise

-This is because goods are always sold for cash

5. Large capital is not required to start such a business

Advantages to the customer

-The customer can save the trouble of going to the retailer’s shop

He sends the order from goods through post and gets them at his residence.

Disadvantages of Mail order Business

1. No personal contact between trader and customer

2. Customer may be misled

-Customers are misled by false and exaggerated advertisement

3. No credit facility
4. Heavy advertisement expenses
5. Limited range of goods

-There are particular classes of goods which alone are suitable for
mail order business i.e. the range of goods that can be sold by this
method is limited
 INSTALLMENT SELLING

-This is a form of customer credit in which the purchases pays a deposit on

an article and pays the balance of the purchase price plus interest in regular
installments over periods of six months or two years or more.

-Products sold on installments or on hire purchase terms are usually

comfort items and not necessities e.g. furniture, radios, tape recorder,
refrigerators, cars

-Goods may be sold on installments in the following two ways

a.) HIRE PURCHASE

-Hire purchase is a system where a person buys an item by regular

payments while using it.

-The terms of payment for goods taken on hire purchase are that a down
payments while using it.

-The remaining amount owed to the seller is paid in equal installment

spread over an agreed period of time.

Other features of hire purchase include;

1. The buyer acquires possession of the goods immediately after the

down payment is made.
2. Ownership of the goods remains with the seller the goods are ‘’on
hire’’ to the buyer
3. The buyer cannot sell the goods until all the payments have been
completed
4. In case the buyer defaults in payment, the seller can repossess the
goods
5. The seller must display both the cash price and the hire purchase
price on the items to enable the buyers to decide under what terms
they want to buy the goods

Advantages of hire purchase

To the buyer
 1. The buyer can acquire expensive goods which would not be possible if
they were on cash terms
2. The buyer obtains possession and use of immediately
3. The predetermined budget to enable the buyer to budget for the
goods.

To the seller

1. The sales volume increases

2. Higher profit margins are realized
3. Goods on hire can be repossessed if the buyer defaults in payment
4. Ownership of the goods is retained until the payment is completed.

b.) DEFERRED PAYMENT/ CREDIT SALE

-This means that the article/ product becomes the property of the buyer as
soon as the first installment is paid.-In this form of credit selling, the buyer
is not required to pay a down payment

Other features of deferred payment are;

1. The ownership and possession of goods possess on to the buyer

immediately the first installment is paid.
2. Once the goods are sold they can’t be repossessed by the seller even if
the buyer defaults in payment
3. In case the buyer defaults in payment, the seller can obtain
compersation through court action.

Disadvantages of installment selling. (Hire purchases and

deferred payments)

1. Higher prices are paid due to the interest

2. Variety of goods offered for sale is limited
3. The risk of loss due to bad debts is very high

-This is because some customers may default in payments

4. A large capital is needed to operate the business

5. Repossessed goods are usually second-hand; hence possibility of
reselling them might be low.
6. There is a lot of record keeping which is expensive for the business.
 DIFFERENCE BETWEEN HIRE PURCHASES AND
DEFERRED PAYMENTS

Hire purchase Deferred payments

1.A down payment is given -There is no down payment
2.Goods are on hire to the buyer -The buyer owns the goods
3.There is an agreement to hire and -There is an agreement to buy with
on option returning no option of returning the goods.
4. The buyer cannot sell the goods to -The buyer can sell the goods to
another person before completing another person before completing
payment. payments.
5. Goods on hire are the property of
-Goods taken are the property of the
the seller until the completion of the
buyer after the first installment
payments.
6. Goods can be repossessed in case -Goods cannot be re-possessed in
of a default in payment. case of a default in payment.

PROBLEMS AND CHALLENGES FACING RETAIL TRADERS IN

TANZANIA

-Retail traders in Tanzania experience a number of problems as listed

below;-

a.) Poor transport and communication

b.) Lack of storage

c.) Limited areas and building to locate their business

d.) Limited possibilities of expansion

e.) Uncertainty of continuity

f.) Lack of training

FACTORS TO CONSIDER WHEN SETTING UP A RETAIL

BUSINESS
 a.) Experience and knowledge of the business in mind

b.) Location of premises

-To decide on a particular area when to set up, taking in mind the
demand for your product and competition from shops selling

c.) Source of supply of goods

-You should know where to get your goods for sale.

d.) Adequate of capital

e.) Laws and regulations

-You should study the commercial laws which govern the type of
business you want to set up.

ORGANIZATION OF A LARGE SCALE RETAIL SHOP

1. Purchase department
2. Sales department
3. Accounts department
4. Administration department

MODERN TRENDS IN RETAILING

-Recent years have been great development in retail trade in East Africa

-The volume of retail trade has expanded leading to a better standard of

living

-Two developments have directly contributed to this dramatic increase in

large scale retailing namely Branding and Pre-packing.

a.) BRANDING

-Branding is a process of giving a particular name to a product.

-Example; Lux, Rexona, Imperial leather, Lifebuoy etc. are all different
brands of bathing soaps i.e. they are branded products.
 b.) PRE- PACKING

-Pre-packing means to wrap or package a product before marketing

-Except for meat and vegetables most products are sold pre-packed by
retailers example tea-leaves, cooking fat, oils etc all come pre-packed in
containers

-Pre-packaging is one of the main factors responsible for the development

of large scale
retailer

-It makes handling of products much and convenient for the retailers
 WHOLE SALE TRADE
Wholesale trade: is a process of buying goods in a very large quantity
from producers or manufactures and selling them mainly to retailers

A wholesaler: Is a person who buys goods in very large quantities from

producers or manufactures and selling them mainly to retailers.

FUNCTION OF A WHOLESALER

1. Provide a link between the retailers’ and manufacturers; He

buys goods from producers or manufactures and selling them to
retailers. By doing so he created bridge connection from producers or
manufactures with many consumers.
2. Bulk breaking: He buys goods in bulk from producers or
manufactures and divides it up into smaller packages that are
convenient to the retailers.
3. Storage: A wholesaler owns a large warehouse for storing the large
quantities of goods that he buys from various suppliers before selling
to retailers.
4. Financing (Cash paying) A wholesaler buying in large quantities
and paying in cash, he finances the manufactures.
5. Prince stabilizer: When he buys in large quantities he avoid the
problem of price fluctuation (rise and full of prices).

Also the stabilized price of storing goods and releasing only the
required quantity in to the market.

6. Source of information: He supplies market information to both

manufactures and retailers with regard to product changes.
7. Risk bearing (taking) he accepts full responsibilities loss due to
damage fuel in demand changes in fashion, stolen by thief, destroyed
by fire etc.
8. Preparing goods for sale: Sometimes the wholesaler packs grades
or hands them to retailers.

SERVICES PROVIDED BY WHOLESALER TO

MANUFACTURERS
1. Clear production line by removing goods in large quantities as they
are provided.
2. Release the manufacturers on the risks associated with:-

 Lack of sale of goods due to fall in demand

 Full in price due to fall in demand
 Fall in price due to an increase in supply
 Bad debtors resulting from credit sales to retailers

3. Releases the manufacturers on the need of warehousing

4.Releases the manufacturer on the trouble of finding markets for his

products

5.Feed the manufacturer with information from retailers

6. Contributing positively on the manufacturer’s cash flow position by

paying him promptly. (quickly)

7. Saves the manufacturer from the problem of transporting goods

from the factory to the market

8. Assist the manufacturer in market research.

SERVICES PROVIDED BY WHOLESALERS TO RETAILER

1. Breaks the bulk of the goods into size that can be reasonable handled
by a retailer.
2. Enable the retailer to obtain stock more conveniently.
3. Offer a retailer a great variety of goods than may one manufactures
would be able to offer.
4. May prepare goods for sale by grading, branding and blending.
5. Usually organizes transport from the ware house to retailers shop.
6. Advices the retailer on new products, their contents, from them how
to handle them etc.
7. Often sell goods to retailers at discount, they enable retailer to sell at
profit
8. Provide storage facilities by making an necessary for the retailer to
have own store. Also the retailers saves by avoiding costs of carrying
slow moving items (stocks)
9. Often extends credit facilities to retailers which increase their
operational ability.

SERVICES PROVIDED BY WHOLESALER TO CONSUMER

1. Enables the consumer to obtain a steady (continuous / no change)

flow of goods throughout the year unsteady price does this by buying
and storing goods when they are plentiful and releasing them they are
short in supply.
2. Convey information from the consumer (e.g. Complaint is change in
fashion or tastes to the manufactures or producers and releases the
consumer information from manufactures regarding new product,
change in old products etc).
3. Ensures that consumer’s needs are adequately entered for by storing
a large variety of products.
4. The whole sales convenient location enables consumers to get goods
when they want them.

TYPES OF WHOLESALER

There are two types of wholesaler

1. Merchant whole saler

2. Agent whole saler

1. MERCHANT WHOLESALERS

Is the one who buy and sell goods on his own capital or perform all
activities for his profit or loss.

2. AGENT WHOLESALERS

Is the one who perform the duty of buying and selling on behalf of the
owner known as a PRINCIPAL.
 I.TYPES OF AGENT WHOLESALERS

1. Commission Agent:

Is the one who buys and sells goods on behalf of the owner and
receives a payment called commission as his remuneration. He is not
responsible for any losses resulted e.g. unsold stock, change in
fashion.

2. Del cledere Agent:

is the one who buys and sells goods on behalf of the owner but they
are paid on extra payment known as del – cledere Commission
because they are responsible for the risk of being left with goods on
their hands. He arranges with his principle that he will be liable or
responsible for any that he will defaults of the customers introduces
by him.

3. Broker

Is the one who brings business relationship between the seller and the
buyer.

He is only concerned with making bargain and contact between other

parties. He does not take physical possession of goods. Each broker
tends to specialize in a particular line of goods or services.

Broker receive a payment knows as Brokerage charge.

FACTORS

A factor is the one who sells goods on behalf of his principal. He referred
to as commission salesman. He receives a payment as known as
commission

THE DIFFERENT BETWEEN FACTOR AND BROKER

FACTOR BROKER
 He takes possession of goods 1. He does not take possession
 He receives payment and of goods
 gives valid receipts 2. He does not receives payment
 He bus the authority to sell 3. He does not have authority to
goods on his name sell on his own name. He
 He is a general mercantile not sales on the name of his
specialized principal
4. He specializes in a particular
line of goods or services

II: TYPES OF MERCHANT WHOLESALER

Merchant wholesalers can be classified in to different ways as order

ACCORDING TO THE RANGE OF PRODUCTS HANDLING BY

THEM

The whole seller under this class is

 General merchant wholesaler

 General line hole sales
 Specialized whole sales

I: GENERAL MERCHANDIZE WHOLESALER

These are whole sales who deal in a variety of goods like food staffs
Hardware from equipments electrical goods, sports etc

II: GENERAL LINE WHOLESALER

These are wholesaler who deal with a wide variety of goods in a single
product line for example hardware, wholesalers, stationary whole sales

III: SPECIALIZED WHOLESALER

These are whole sales who trade in only one type of goods within a given
line of product for example he may deal on selling cement only, Books only
iron sheets only etc
ACCORDING TO THE GEOGRAPHICAL SPREAD OF
OPERATION

The wholesaler under this class are

 National wide wholesalers

 Regional wholesalers

I: NATIONAL WIDE WHOLESALER

These are wholesalers who operate on very large scale and have large
warehouse in major towns of the country. They usually after large range of
product

II: REGIONAL WHOLESALER

These are wholesalers that sell goods within a particular area or region for
example within a district of province and many after a large of goods or
specialized of range of them.

ACCORDING TO THE METHOD OF OPERATION

The whole sales under this class are

 Truck whole sales/ wagon jobbers

 Back jobbers/ Rack merchandiser
 Mail order whole sales
 Cash and carry whole sales

I: TRUCK WHOLESALERS/ WAGON JOBBERS

These are whole sales that carry a limited range of stock and combine
selling, delivery and collection function in one operation

II: RACK JOBBERS/RACK MERCHANDISER

These are wholesalers that specialize in marketing a particular type of

goods to other specialized wholesalers. Rack salers/jobbers in east Africa
include those who buy agricultural food staff wholesaler in urban areas.
III: MAIL ORDER WHOLESALER

These are wholesalers who sell directly to consumer rather than through
retailer. They usually deal in general merchandise conducts national wide
operations. The bull of their sales are made on the basic of short term
credits

IV: CASH AND CARRY WHOLESALER

These are wholesalers who stock a wide variety of goods, to enable retailers
visiting their premises, pick the goods they want, pay for them and then
transport the goods to the retailers premises.

CHANEL OF DISTRIBUTION

Channel of distribution: is the way through which goods pass from

manufactures to the final consumers. The following is the diagram showing
channel of distribution.

From the diagram above

1. The manufacture sell his product either to a wholesaler or to a large

scale retailers in both cases the quantities involved are very large
2. Some manufacturer may operate their own retail outlets
3. The wholesaler sales goods to retailers in somehow smaller quantities
compared to that from manufacturer
 4. Some small scale retailers may buy their supply from a large scale
retailers or retail shop operated by producer himself.
5. The retailer sells goods to a consumers.

CHARACTERISTICS OF CHANNEL OF DISTRIBUTION

The concept of channel structure identifies three parties that are

necessary to enable distribution to be effective. These are:-

1. Producers
2. Middleman
3. Consumer

A Middleman: Is a independent business man in between

producers and consumer who buy goods from the producers and sell
them to consumer.

Function of middleman

1. Concentrating in collecting various product from various product

from various producers
2. Sub dividing these product into quantities required or desired by
consumer
3. Distributing sub divided quantities of these assessments to the
consumer industrial Users.
 Middle man include:-

1. Agent middleman
2. Merchant middleman
3. Wholesaler middleman
4. Retailer middleman

ELIMINATION OF A WHOLESALER IN THE CHANNEL OF

DISTRIBUTION

In order to eliminate or passing away the wholesaler on the channel

of distribution the following factor must be considered:-

1. A wholesaler can be eliminated if there are many large scale retailers

who can manage to buy directly from producers.
2. A wholesaler can be eliminated if the manufactures have established
many retail outlets (own retail outlets)
3. If the manufacturer have enough storage facilities
4. A wholesaler can be eliminated where goods are produced and sale in
small quantities
5. If the manufacturer have their own transport facilities to distribute
goods to retailers.

FACTORS WHICH DETERMINE THE CHOICE OF A

CHANNEL OF DISTRIBUTION

The following are the factors which must be considered in choosing

the channel of distribution.

1. The nature or characteristics of the product

This refers to the perish ability or durability of a product. For durable

goods long channel may be used.

2. The value of product

 The long channel means high cost on distributing goods. Under this
aspect of value care must be taken to avoid unnecessary costs which
may result to high price to final areas and therefore allow market.

3. Availability of channel distribution

The choice should be consider over the availability of the channel of

distribution

4. Market consideration:

This refers to the general market outlook that is preference of the

customer’s purchasing power and altitudes of the customers towards
the products on relation to competition.

5. Middle man altitude:

Some middleman tend to have negative altitudes towards products

the willingness to distribute should be checked with a great care for
instance some middlemen tend to sell goods at higher prices through
scarcity which they orient themselves.

6. Technical nature of the product

Some technical product demand technically known how in handling

them. For example, electrical equipment, video sets, music system
etc. This also must be considered of the product fall under this
category.

IMPORTANCE OF A WHOLESALER AS A LINK BETWEEN

A PRODUCER AND RETAILER

To small retailers and small manufactures the wholesaler is very

important otherwise they find the following duties.

1. Holding a large stock of a variety of goods sacks of business capital.

2. Assembling goods from a number of manufactures or producers who
usually widely scattered is very difficult.
3. Arranging for arrange a packing and grading of goods
4. Bearing the parties fluctuation and changes in fashion.
 ADVANTAGES OF WHOLESALE TRADE

The following are advantage of the wholesaler trade:-

1. Provides services to producers/ manufactures

2. Provides market research on the behalf of the manufactures
3. Provides goods to retailer from serious manufactures
4. Stabilizers prices/ they minimize the problem of price fluctuation.

DISADVANTAGES OF WHOLESALER

1. Sometimes a wholesaler may refuse to buy goods because of the high

price and also he may refuse to sell goods because of fall in price thus
including shortages.
2. Sometimes a wholesaler provide incorrect information to
manufactures regarding market situation
3. They can create shortages in view of some selfish motives.

GENERAL PROBLEM IN HOME TRADE

The following are problems facing of home trade:-

1. Small scale operation

This is due to lack of finance capital most trader operate in very small
scale they cannot buy goods in large quantities due to lack of capital.

2. Lack of capital

There is a problem in getting capital in both initial investment and

business expansion.

3. Poor transport and communication

Traders particularly rural areas still have to waste for considerable

period before receiving their supplies due to poor transport facilities.
4. Lack of training (knowledge)

Many people lack of knowledge about stock control, book keeping

selling techniques, costing e.t.c.

5. Poor ware housing / storage facilities for wholesaler

As we know there are some goods produced seasonally but demand

from them is throughout the year so warehousing facilities are highly
needed (required).