Wholesaling: Marketing and Wholesaler

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Chapter 11 – Channel Institutions: Wholesaling
Definition of Wholesaler
* The wholesaler, or the wholesale trader, is a trader, who purchases goods in large quantities from manufacturers and resells to retailers in small quantities. Functions of Wholesaler
A summary of the functions of wholesaler is given below.
* 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 of the 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. Wholesaling functions to Producer Supplies
* Order collecting and marketing agency for the producer
* The manufacturer is able to produce on a large scale as the wholesaler places truckload or container load orders on the manufacturers * Wholesaler places orders in advance
* Manufacturers can thus focus on the quality and quantity to be produced * The wholesaler is in touch with the market and understands its pulse extremely well * Helps in maintaining price stability

Wholesaling Functions for Retailers and other Customers
* A retailer does not have the financial resources or the space to keep the full assortment of products required by his customers at all times. * By getting the stocks when required, he manages his own inventory well, thereby reducing the risk of carrying extra stocks * Wholesalers deliver goods promptly

* Wholesaler delivers the best value for the goods handled by him * The retailer gets info.about new products, promotions and the like in advance form the wholesaler. * The freelance wholesaler usually handles the goods of a large number of manufacturers * Distributors also sell directly to retailers but their call frequency is defined and if the retailer does not but from his distributor, he has to wait his turn till the next visit * The wholesaler normally sells to important retail customers on credit

Classification of Wholesalers
Wholesalers have been traditionally classified into various categories depending on the range of functions to perform. A broad classification is given below: * Full Service- Stocking, selling, offering credit, delivery and any business assistance are all provided. * Limited Service- the name indicates that the range of services are limited. * Merchant wholesaler- independent businesses

* Brokers and agents- these people bring the buyer and seller together and rarely handle the goods themselves and get a commission out of all transactions * Miscellaneous- includes agricultural produce business.

Type of WholesalerBrief Explanation
Full Service:
General MerchandiseStock a wide assortment of unrelated product lines General LineCarry one or two product line but in depth
SpecialtyOne particular line of product
Rack jobbersStock displays of products not normally carried by retailers Voluntary ChainsMost common in grocery retailing
Producer CooperativesMost common in agricultural products Limited Service:
Cash and CarryUsually stock a limited number of products, and turnover items Drop ShippersDeal in Bulky products
Truck WholesalerOperate rolling warehouses
Mail OrderSend catalogue to customer
Retail CooperativesMost common found in grocery retailing Manufacturers AgentAn independent wholesaling middlemen who sells on a commission basis for several manufactures of related, but non-competing products. Commission AgentsPhysical Control of their principals products, provide storage and negotiate

Sales between principals and buyers.
Selling AgentsHandling competing product lines, operate nationally,...
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