WHOLESALE TRADE

• Wholesalers’ role in the chain of distribution (Page 111)

• Functions of wholesalers, including services provided: (Pages 111- 113)
• breaking bulk
• risk bearing
• advice to retailers
• offering trade credit
• freeing storage space for smaller stores
• preparing goods for resale
• delivering to retailers.
Types of wholesaler: (Pages 113-114)
• Wholesalers’ role in the chain of distribution
• Manufacturer --------Wholesaler---------Retailer-------Consumer (chain
of distribution)
• Wholesaler is also known as middleman/intermediary who plays the
important role of linking the manufacturer and the retailer.
• 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.
 WHOLESALE TRADE
https://www.youtube.com/watch?v=ovFl2PsnP2c
Advantages of the Wholesaler
• To Manufactures/Producers
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 lines are cleared.
5. Transportation is provided by wholesalers.
6. Feedback of market.
 
• To Retailers
1. Variety is provided from different producers.
2. Wholesaler provide credit.
3. Wholesaler provide transportation.
4. Educate small scale retailing on new products, shop layout
and advertising.
5. Pack and grade before selling to small scale retailing.
6. Sell in small quantities.
7. Warehousing is done by wholesaler
• To End Customer

1. Variety.
2. Convenience (products are available to small scale
retailing through wholesaler).
3. Competitive rates.
4. Continuous availability of products.
5. Price fluctuations are minimized.
6. Customer demand is met.
Functions of wholesalers, including services provided:

• Breaking bulk
Wholesalers will buy the products bulk from manufacturer and sells in
small quantities to the retailers.
 
• Risk bearing
Wholesalers have to bear risk the if products are damaged, spoilt or stolen
 
• Advice to retailers
Wholesalers updates the retailers on latest production and give advice.
• Offering trade credit
Wholesalers grants credits to retailers, that is, lets them take the goods first without
paying.
 
• Freeing storage space for smaller stores
Wholesalers provide storage space for small stores who do not have storage facilities to
keep large stocks of goods.
 
• Preparing goods for resale
Wholesalers help to sort the goods and repack them into smaller units according to grade
and quality as it will be helpful to resale the product.
 
• Delivering to retailers.
Wholesalers provide transportation to deliver the products from warehouse to the retailer.
 
 
 Types of wholesaler:
a) General wholesalers
· They usually stocks a wide variety of goods including food and non-
food items.
· These wholesalers send their sales representatives to retailers to take
order, which the wholesaler will then deliver.
· Retailers will be benefit from trade credit, which allows them to
receive goods now and pay them later.
·Advantages:
1) Retailer will have many choices of product at one place.
2) Retailers can get trade credit when buying from general wholesalers.
b) 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.
· Generally located in commercial areas.
· Advantages:
1. Cheap goods due to self-service.
2. No restriction on purchase of a minimum quantity.
c) Voluntary chains.
 
· Wholesalers and retailers enter into an 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:
ü Confirmed source of supply.
ü Cheap source of supply.
ü Full technical support from wholesaler.
 Types of goods
• Substitute goods
• Substitute goods are two alternative goods that could be used for the
same purpose.
• Example of substitute goods:
• Tea and coffee
• Complement goods
• Complementary goods are products which are bought and used
together
• Example of complement goods
• Pen and Ink
• The following goods are complementary or substitute goods?
• 1.Pepsi and Coca-Cola
• 2.PlayStation and Games
• 3.Mobile Phones and Sim Cards
• 4.Supermarket-branded and Branded products
• 5.Movies and Popcorn
• 6.Pencils and Notebooks
• 7.Tennis Balls and Tennis Racket
• 8.Transport by Car or Train
• 9.iPhone and Samsung Galaxy
• 10.Pizza Hut and Domino’s
• 11.McDonalds and Burger King
• 12.Burger and Burger Buns
• 13.Petrol and Cars
• 14.Pencils and Notebooks