CHANNEL INSTITUTIONS- WHOLESALING

Who is a Wholesaler? Wholesalers buy and resell merchandise to retailers and other merchants and to industrial, institutional and commercial users but do not sell in significant amounts to ultimate consumers….Cundiff & Still.

Freelance Wholesalers.. Operate in main markets especially out of their shops. Handle a large assortment of similar products. Operate on thin margins. Don’t operate for any companies but sell the FMCG products and brands. Try to negotiate quantity, discounts from the companies selling to them. This type of wholesalers in the rural and the secondary markets get easily to stock and sell infringements and counterfeits of well known brands.

How the Wholesalers deliver value? Keep goods in stock that customers need and have accessible instantly. Operate on low margins and high turnover so they get an advantage to bargain for better items.

Difference between wholesaler & retailer…. Less bothered about location, ambience and promotions. Deal with other businessmen and not consumers( exceptions like in rural market). Deal with a specific category of products. Trading area is much larger than the retailers. Deal in much larger individual transactions but with their suppliers. Margins of operations are low but selling is done in huge volumes.

Functions of a Wholesaler.. 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 goods till they are sold out. Transportation of goods to the customers. Financing the buying of goods and extension of credit to the customers. Bearing the risks associated with the business.

Wholesaling functions for Producers Suppliers.. Order collecting and marketing agency for the producer. Wholesalers places order well in advance which ensures great deal of sales certainty to the producers, who need to keep inventory. Manufacturer can thus focus on quality and quantity to be produced. Wholesaler reduces the burden of market research for the manufacturer.

Wholesaling functions for retailers and other customers.. Retailer doesn’t have ample space rather financial resources as that of the wholesaler. Reduce the risk of carrying extra stock. Wholesaler delivers the best value of goods. Deliver goods promptly to retailers hence the waiting time reduces. Retailers get information from the wholesaler about the variety of products by means of which the retailer can plan his purchase better. Wholesaler may sell goods to retailers on credit.

Classification of Wholesalers.. Types of wholesalers FULL SERVICE LIMITED SERVICE General Merchandise Cash & Carry General Line Drop Shippers(Western) Speciality Truck Wholesalers Rack jobbers(Western) Mail Order Voluntary Chains Manufactures Agents Producers Co-operatives Selling Agents Auction Companies

Key Task of a Wholesaler.. Assembling and Aggregating the goods. Warehousing the goods. Order booking and execution. Transportation of the goods. Financing the business. Risk bearing. Grading and packing. Providing market information.

Limitations.. Lack of correct information. Addition of the wholesalers into the channel network may add to the cost, which ultimately has to be borne by the end customers. Consumers have no say on the pricing and quality in the wholesaler dominated system. Wholesaler tend to corner all the goods and hence influence the pricing of the goods to retailers and customers.

Major wholesaling decisions! Which markets to operate in? Manpower. What type of product to sell? Promotional support. Credit and collections. Image and customer perceptions. Warehouse location and design. Inventory control.

How an ideal distributor is selected? Security deposit. Payment by the Distributor. Credit to extended by the Distributor. Investment in inventory. Investment in the infrastructure. Manpower. Coverage of markets.

Contd.. Developing Rural markets. Outlet coverage. New accounts. Institutional accounts. Secondary sales effort and tracking. Competition tracking. Handling product promotions. Managing damaged stocks.

8) Organizing and participating in promotional events 8) Organizing and participating in promotional events. 9) Reimbursement of the cost of promotions to the distributor. 10) New product launch. 11) Motivational tools for distributors.

Thank you…