WHOLESALE TRADE.

Wholesale trade deals with the bulk buying of goods from various manufacturers and the breaking down of this bulk into smaller quantities which is then sold to the retailer. Wholesaler is an intermediary distributor.

In simpler terms we can safely say a wholesaler is a middleman between a Producer and a Retailer, He buys goods in large quantities, break and sell them in bulks to Retailers.

Functions

1. Buys in large Quantities from different producers.
2. Looking for a good source of supply.
3. Bears the risk, if products are damaged, spoilt or stolen.
4. Warehousing- they offer Storage facility.
5. Transportation from the producer to warehouse and from warehouse to the retailer- Delivery service.
6. Offering a wide variety of goods under one shop.
7. Bulk breaking.
8. Packing.
9. Purchasing in cash from producer.
10. Selling on credit to the customer.
11. Link between producer and his market.
12. Providing technical help to small scale retailers.
13. Maintaining stability in price.
14. Offering advice on how to layout goods in an attractive way.
15. Advertise and promote the goods on behalf of Producers.
16. Branding.
17. Blending.
18. Bottling.

TYPES OF WHOLESALERS

General or Traditional wholesalers

These are wholesale outlets that perform all the functions performed by wholesalers.

REF. functions of Wholesalers.

Cash-and-carry wholesalers

• It is a wholesale supermarket, where retailers can buy goods in bulk at low prices.
• No credit nor delivery of goods are provided.
• Goods are sold in cash and carry basis.
• Their prices are very low.
• They also sell their merchandise to Consumers.
• Customers can use trolleys or baskets when shopping.
• Good are neatly packed on shelves.
• They have numerous checkout points.
• They have security measures in form of security guards; mirrors and CCTV
• Generally located in commercial areas.
• Advantages:
1. Cheap goods due to self-service.
2. No restriction on purchase of a minimum quantity.

Specialist wholesalers

These are wholesale outlets that specialize on one line of merchandise e.g. electrical appliances or groceries.

Their functions are similar to those of General wholesalers.

Co-operative wholesalers

These are wholesale outlets that are formed by a group of people e.g. Farmers or Retailers.

·         If formed by farmers, they can produce their own goods.

·         If formed by retailers they buy from producers and sell their goods primarily to the members of the group then to other retailers.

·         First preferences are given to owners

·         Can train their members in Business management

·         Can assist their members through scholarship programs; and during funerals

·         Each member contributes capital towards making of the business

·         They share their profits at the end of each successive year

·         The business is run and managed by its owners

·         Their operational functions are similar to those of General wholesalers.

Voluntary chain

• Wholesalers and retailers enter into a agreement for purposes of mutual commercial benefits.
• Under this agreement all parties agree to work under a common name and symbol.
• Retailers agree to buy exclusively from specific wholesaler.
• All are responsible for their own profit and loss.
• Advantages to retailer:
1. Confirmed source of supply.
2. Cheap source of supply.
3. Full technical support from wholesaler.
• Advantages to wholesaler:
1. Assured amount of turnover.
2. Consolidated order.
3. Administrative cost becomes low.

Comparison of Large Scale Retailers and Wholesalers

Similarities

1. Purchase in bulk.
2. Purchases directly from the producer.
3. Purchase in cash.
4. Bulk breaking.
5. Risk bearing.
6. Large capital.
7. Specialist staff.
8. Invest in fixed assets.
9. Transportation from producer to warehouse.
10. Warehousing.
11. Link between customer and producer.
12. Work as private and public limited companies.

Dissimilarities

	Large Scale Retailers	Wholesalers
1.	Sell to end customer.	Sells to SSR.
2.	Can sell in smaller quantities.	Sell only in large quantities.
3.	Sell on cash.	Sell on credit.
4.	Normally do not provide home delivery.	Normally provide transportation to SSR.
5.	Impersonalized services.	Provide support to SSR.
6.	Can perform branding and advertisement.	Do not perform branding but can advertise.
SSR= Small Scale Retailers

Importance of Whole Scale Retailers in Distribution channel

To Producer

1. Producers are relieved of the risks.
2. Producers are relieved of storage of products.
3. By providing prompt cash, cash flow problem is reduced.
4. Due to purchase in bulk, production line are cleared.
5. Transportation is provided by wholesalers.
6. Feed back of market.

To Retailers

1. Variety is provided from different producers.
2. Wholesaler provide credit.
3. Wholesaler provide transportation.
4. Educate SSR on new products, shop layout and advertising.
5. Pack and grade before selling to SSR.
6. Sell in small quantities.
7. Warehousing is done by wholesaler.

To End Customer

1. Variety.
2. Convenience (products are available to SSR through wholesaler).
3. Competitive rates.
4. Continuous availability of products.
5. Price fluctuations are minimized.
6. Customer demand is met.

Reasons why wholesalers are eliminated in the distributive chain.

1. High value items (producers directly to customers).
2. Branded items.
3. Products are highly technical (training secrets).
4. Producers are resourcefully strong (Producers own retail outlets).
5. Products are very perishable (for example bakery).
6. Customized items.
7. Small market.
8. Large scale retailers.
9. Branded items advertised and pre packed by producers.
10. Banks provide easy loans and thus Large scale retailers have enough or adequate capital of purchasing directly from producers.
11. Large Scale Producers can perform functions performed by Wholesalers e.g. branding; grading; bottling; advertising and promoting goods.
12. Rise of Agents.
13. Rise of Mail Order Firms.
14. Rise of Marketing Boards.
15. There is need of one stop shopping.
16. Transportation and inventory management has become easy.

Instances where wholesalers are still involved

1. Standardized items.
2. Seasonal production (farm products).
3. Unbranded items (farm products).
4. Large markets.
5. Producers do not have resources.
6. Imports and exports.