2. Definition of Wholesaling
According to Philip Kotler,
“ Wholesaling consist of the sale and all activities in
selling goods or services to those who buy for resale or
business use.”
According to American Marketing Association
“Wholesalers sell to retailer or other merchants and or
industrial, institutional and commercial users, but do not
sell in significant to ultimate consumers.”
3. Characteristics of Wholesaling
Wholesalers generally buy merchandise direct from the producers in
large quantity mainly in cash.
They are trading concern having an army of agents and stocks the large
quantity of goods, supply or sell goods to the directly or through their
agents in small quantities.
Wholesalers are financially good health. They purchased goods in cash
from the manufacturer and sell to the retailers on credit.
Wholesalers profit margins is very small so that they can maximizes their
sales volume to earn maximum profit.
They deals in limited product line or products.
They maintain warehouse and godown at different places in the country
to facilitate the trade at minimum transportation charges. They
sometimes make the grading of goods under their own name or brand
name.
4. IMPORTANCE OF WHOLESALERS
1. Services to the Manufacturers.
ii. Stocking.
iii. Market Information.
iv. Expertise Knowledge.
v. Assist in Production.
vi. Financing
vii. Risk Reduction.
5. IMPORTANCE OF WHOLESALERS
2. Services to Retailers.
ii. Convenient Buying.
iii.Stocking.
iv. Expertise Knowledge.
v. Financing.
vi. Market information.
vii.Risk Reduction.
3. Services to the Society.
6. FUNCTIONS OF WHOLESALERS.
Selling and Promoting.
Buying and Assortment Building.
Bulk Breaking.
Warehousing.
Transportation.
Financing.
Risk Bearing.
Market Information.
Management Services and Counseling.
7. MAJORS WHOLESALERS TYPES
1. Merchant Wholesalers.
ii. Full Services Wholesalers.
a. Wholesale Merchants.
b. Industrial Distributors.
4. Limited service Wholesalers.
v. Cash and carry Wholesalers.
vi. Truck Wholesalers.
vii. Drop Shippers.
viii. Rack Jobbers.
ix. Mail order Wholesalers.
8. MAJORS WHOLESALERS TYPES
3. Merchandising Brokers and Agents.
ii. Brokers.
iii.Agents.
a) Manufacturer Agents.
b) Selling Agents.
c) Purchasing Agents.
d) Commission Agents.
4. Manufacturer and Retailers Branches Offices.
5.Miscellineous Wholesalers.
9. Major Wholesalers types
Merchant Wholesalers - Independently owned businesses that take
title to the merchandise they handle. They are called jobbers,
distributors, or mill supply houses and fail into two categories, full
service and limited services.
t Full Service Wholesalers- They perform full range of activity. They
assemble the assortment at a given place and provide trade credit,
offer promotion assistance , provide personal sales force, passing of
information to customers and installation and services.
Wholesale Merchants- Wholesale merchant sell primarily to
retailers and provide full range of services. General merchandise
wholesalers carry several merchandise lines. General line
wholesalers carry one or two lines. Specialty wholesalers carry only
part of line.
Industrial Distributor- Industrial distributor sell to manufacturers
rather than to retailers and provide several services – carrying stock,
offering credit, and providing delivery.
10. II. Limited service wholesalers- They do not perform all the
functions as the full service wholesalers. They do not do not
provide credit, marketing research information and
merchandising assistance.
s Cash and Carry wholesalers- Have limited line of fast
moving goods and sell to small retailers for cash.
Truck Wholesalers- Primarily sell and deliver a limited line
of semi perishable merchandise to supermarkets, small
groceries, hospitals, restaurants, factory cafeterias, and hotels.
t Drop Shippers- Operate in bulk industries, such as coal,
lumber, and heavy equipments. Upon receiving an order, they
select manufacturer, who ships the merchandise directly to the
customers on the agreed upon terms and timely delivery. The
drop shippers assumes title and the risk from the time the
order is accepted to its delivery to the customer.
11. d) Rack Jobbers – Serve grocery and drug retailers, mostly in non
food items. They send delivery trucks to stores, and the delivery
people set up displays, price the goods, keep them fresh, set up
pint of purchase display and keep the inventory record. Rack
jobbers retain titles to the goods and bill retailers only for goods
sold to consumers.
e) Producers Cooperatives – Assembles farm produce to sell in
local markets. Cooperatives profits are distributed to members at
the end of years.
f) Mail Order Wholesalers – Send catalogs to retail, industrial, and
institutional customers featuring jewelry, cosmetics specialty foods
and other small items. Main customers are business in small
outlaying areas. No sales force is maintained. Orders are filled and
sent by mail, truck or other means of transportation.
12. Merchandising brokers and Agents – They usually perform fewer
services than merchant wholesalers. Merchandising agents and brokers
do not take little to the product but negotiate sales for the manufacturer
they present.
l Brokers – Chief function is bringing buyers and sellers together and
assisting in negotiation. They are paid by the party who hired them and
do not carry inventory, get involved in financing, or assume risk. The
most familiar example are food brokers, insurance broker, and security
brokers.
a Agents – Represents either buyer or seller on a permanent basis.
Manufacturer agents – Represents two or more manufacturers of
complementary lines. They enter into a formal written agreement with
each manufacturer covering pricing policy, territories, order handling
procedure, delivery service and warranties and commission rates. Often
used in such lines as apparel, furniture and electrical goods. Most
manufacturers agents are small business with only a few skilled sales
persons.
13. Selling Agents – Have contractual authority to sell a
manufacturer entire output in such product areas as textiles,
industrial machinery and equipments, coal and coke,
chemicals and metals.
Purchasing Agents – Generally have a long term
relationship with buyers and make purchases for them, often
receiving, inspecting, warehousing and shipping merchandise
to buyers.
Commission Merchants – Take physical possession of
products and negotiates sales. They are used most often in
agricultural marketing by farmers who do not want to sell
their own output and do not belongs to producers
cooperative.
14. Concern of Wholesalers
Disintermediation
Facility Location.
Transportation costs.
Adaption to New Technologies.
Offering New Product Assistance.
15. Disintermediation –
The growth of the Internet as a communication and distribution
channel has lead many to conclude that wholesaling will lose its
importance as manufacturers and final buyer learn to transact
directly. This so called disintermediation of marketing channels is
real concern to some wholesalers, especially those that do not
function as a dominant party within channel of distribution.
Facility Location-
Wholesalers who are heavily in product shipment may spend
considerable time evaluating sites for locating facilities. For
organization needing very large facilities, the decision as to where
to locate becomes more difficult and more expensive the closer
the location is to major metropolitans areas. In fact, land costs in
some regions of the world have risen so high that utilizing this
space for wholesaling operation may not be feasible. In addition
to land costs, facility location is also affected by access to
adequate transportation, such as roads, seaports, airports and
rail terminals.
16. Transportation costs.
For wholesalers involved in transporting products, the worldwide
rise in fuel costs has forced a close examination of how they handle
product distribution. Transportation expense can represent a
significantly portion of overall distribution costs and these higher
costs are often passed on to customers in the form of higher
product prices.
Adaption to New Technologies.
In addition to technologies to lower fuel costs, other technologies
that assist the distribution process are offering both advantage and
disadvantage to wholesalers. On one hand new technologies, such
as radio frequency identification tags (RFID) placed on shipped
products allow wholesalers to maintain tighter control over their
distribution technologies can be expensive in terms of acquiring and
learning to use.
17. Offering New Product Assistance.
Wholesalers are finding that offering products
is not the only thing of buyers. Many
customers also want wholesalers to offer
additional value added services such as
employee training, promotional support and
assistance in managing their operations.
18. Trends in Wholesaling
Increased Services.
Regional Coverage.
Productivity and quality.
Global Expansion.
19. Increased Services.
Wholesalers have redesigned their services over time to
suit customer requirements. A number of wholesale
druggists in the US now handle the customer records of
retail druggists. This serve to bind the retailer to one
wholesaler. In the grocery business
Eg.
Wholesale have shifted their focus from providing basics
services like extension of credit to offering more
sophisticated services such as merchandising support,
inventory management counseling, conduct profit analysis
for the retailers, etc.
The aggressiveness of wholesaler in offering increased
services is aimed at gaining a competitive advantage.
20. Regional Coverage.
Wholesalers use their subsidiaries to cater to the needs
of the local market segments by sorting limited fast
moving inventory. These outlets have access to a
centralized warehouse to meet their inventory demands.
This a common practice among the distributor of
plumbing, heating and cooling equipment.
Wholesalers are also making use of a leapfrogging
strategy that involves implementing backfire tactics.
Under this strategy of market penetration, the
wholesalers set up branches that are about 1000 miles
away from the main office so that spread backward
towards the home base.
21. Productivity and quality.
As the technology advancement takes place, new
methods of marketing are developed. Wholesalers
are adopting new software technologies for efficient
distribution management systems.
They are using computer systems to receive orders
from their customers rather than individually
contacting them.
Also wholesalers supplying to industrial customers
are tailoring their services quality on the basis of
their requirements.
22. Global Expansion
The increased deregulation environment in the global
markets in which manufacturer operates with the
advance technology is making it easy for wholesaler
to fallow suit.
Wholesalers are now operating in the global
environment and are supplying their goods and
services to customers across the world. This
development in wholesaling has been possible due
the changing market dynamics and customer
expectations.
