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Distribution Management CHAPTER 4

Wholesalers purchase large quantities of goods from manufacturers and resell them in smaller quantities to retailers. They perform key functions like transporting goods, warehousing, financing purchases, and providing market information to suppliers and customers. Wholesalers can be classified by their products, operations, and specializations. They make important decisions around markets, products, pricing, credit policies, and image. However, wholesalers also face limitations in always accurately communicating supply needs between manufacturers and retailers.

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Marielle Dauz
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85 views10 pages

Distribution Management CHAPTER 4

Wholesalers purchase large quantities of goods from manufacturers and resell them in smaller quantities to retailers. They perform key functions like transporting goods, warehousing, financing purchases, and providing market information to suppliers and customers. Wholesalers can be classified by their products, operations, and specializations. They make important decisions around markets, products, pricing, credit policies, and image. However, wholesalers also face limitations in always accurately communicating supply needs between manufacturers and retailers.

Uploaded by

Marielle Dauz
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© © All Rights Reserved
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 • A person or firm that buys merchandise


merchandise to retailers and other and resells it either to retailers for
merchants and to industrial, subsequent resale to the consumer or to
institutional and commercial users, but a business firm for industrial and
do not sell in significant amounts to business use is called a wholesaler..
ultimate consumers.. ~Cundiff & Still ~Mason & Rath
• The wholesaler, or the wholesale
• Wholesaling is concerned with the
trader, is a trader, who purchases
activities of those persons or
goods in large quantities from
establishments that sell .to retailers and
manufacturers and resells to retailers
other merchants, and/ or industrial,
in small quantities
institutional, and commercial users, but
~ E Thomas that do not sell in large amounts to final
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
- Purchases different varieties of transportation of goods from the producers
goods from different manufacturers to his own go down.
• Financing
• Breaking in the ‘Bulk’
- Wholesalers finance the manufacturer by
- Purchases goods in bulk from the giving them advance money with order or by
producers and sells them in small purchasing large quantity of goods on cash
quantities to the retailers. basis and the 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 usually do not deal in - They do not engage in - Another type of middle
goods manufactured by other production or direct sale to men. Engaged mainly in the
firms. the consumers. marketing of agricultural
produce.
• Retail Wholesalers
- Beside selling goods to the • Agents and Brokers • Merchant Wholesalers
retailers they also deal directly - They receive commission from - Undertakes no business
with the ultimate cobsumers. the manufacturer for the work other than the wholesale one.
done by them.
ACCORDING TO SPECIALIZATION

• General Merchandise • General Line • Specialty Wholesalers


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

• Local Wholesaler • National Wholesaler


- They sells goods to - Have their network
local retailers. throughout the country.
• Regional or Sectional • International
Wholesaler Wholesaler
- Sells goods to retailers - Wholesalers dealing
in a certain section. only 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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