Nature and Importance of Wholesaling

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Wholesale Intermediaries
Wholesale transactions are all transactions except the transaction with the ultimate consumer. Classification of a wholesaler or retailer is determined by the purchaser, not by the price. If over 50% of sales is with other intermediaries then the intermediary is a wholesaler. If over 50% of sales is with the consumer, then the intermediary is a retailer. Firms can engage in wholesaling activities without being wholesalers. Return to Contents

Nature and Importance of Wholesaling
Approximately a $1.94 trillion industry in the US
300,000 wholesaling establishments in the US
Employ 6.5 million people, down from 6.57 million in 1989
Very competitive. Wholesalers will be eliminated from a channel if they do not perform valuable functions effectively and efficiently. Return to Contents
Types of Wholesale Intermediaries
2 Types of intermediaries:
* Merchant intermediaries
--buy products and resell them.
* Functional intermediaries
--do not take title, they expedite exchanges among producers and resellers, compensated by fees and/or commission. Merchant Wholesalers
Take title.
Account for approximately 83% of wholesalers, 50% of wholesale sales. Employ 4.5 million people. Two types:
* Full Service Wholesalers-offer widest possible range of functions. Categorized as: * General Merchandise-wide mix (unrelated), limited depth. * Limited Line-only few products but an extensive assortment. * Specialty Line-narrowest range of products.

* Rack Jobbers-are specialty line that own and maintain display racks, take back unsold products. * Limited Service Merchant Wholesalers-only provide some marketing functions. * Cash and Carry wholesaler-customers pay and furnish their own transportation, No credit. * Truck Wholesalers-Operate rolling warehouses and sell a limited line of products directly from their trucks to their customers. Follow regular routes, primarily perishable products....
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