Basics of Marketing - Kotler Philip

Wholesale

The nature and importance of wholesale trade

What is wholesale ? We consider you to be wholesalers of distribution companies, but from this point of view, a small retail bakery is also engaged in wholesale trade, selling its buns, cakes and cakes to a local hotel.

Wholesale trade includes any activities for the sale of goods or services to those who purchase them for the purpose of resale or professional use.

In this chapter, we will use the terms " wholesaler " and " wholesale trade" for firms for whom this trade is their main activity.

Wholesalers differ from retailers in a number of ways. First, the wholesaler pays less attention to the stimulation, atmosphere and location of his trading enterprise, since he deals primarily with professional clients, and not with end-users. Secondly, by volume, wholesale transactions are usually larger than retail, and the wholesaler's trading area is usually larger than that of a retailer. Thirdly, in relation to legal regulations and taxes, the government approaches wholesale and retail traders from different positions.

And why do we need wholesalers at all? After all, manufacturers could bypass them and sell the goods directly to retailers or end users. The answer is that wholesalers ensure the efficiency of the trading process. Firstly, a small producer with limited financial resources can not create and maintain direct marketing organizations. Secondly, even if they have sufficient capital, the producer will rather prefer to direct the funds to the development of production, and not to the organization of wholesale trade. Thirdly, the efficiency of the wholesalers will certainly be higher due to the scope of operations, more business contacts in the retail sector and the availability of special ones. Knowledge and skills. Fourthly, retailers dealing with a wide range of goods often prefer to buy the entire set of goods from one wholesaler, and not in parts from different manufacturers.

Thus, both retailers and manufacturers have every reason to resort to the services of wholesalers. Wholesalers use when they can more effectively perform one or more of the following functions:

1. Sales and promotion. Wholesalers have sales staff who help the manufacturer to reach out to many small customers at a relatively low cost. The wholesaler has more business contacts, and often the buyer believes him more than any distant producer.

2. Procurement and the formation of the product range. The wholesaler is able to pick up the products and form the necessary product range, thus saving the client from significant hassle.

3. Breakdown of large quantities of goods into small quantities. Wholesalers provide customers with cost savings, purchasing goods by wagons and breaking large lots into small ones.

4. Warehousing. Wholesalers store commodity stocks, thereby contributing to a reduction in the respective costs of the supplier and consumers.

5. Transportation. Wholesalers provide faster delivery of goods, as they are closer to customers than manufacturers.

6. Financing. Wholesalers finance their clients by providing them with credit, and at the same time they finance suppliers, issuing orders in advance and paying bills in time.

7. Acceptance of risk. Taking ownership of the goods and incurring costs in connection with its theft, damage, damage and obsolescence, wholesalers take on some of the risk.

8. Providing information about the market. Wholesalers provide their suppliers and customers with information about competitors' activities, new products, price dynamics, etc.

9. Management services and consulting services. The wholesaler often helps retailers improve their activities by training their sellers, taking part in the design of the store's layout and arrangement of expositions, as well as in the organization of accounting and inventory management systems.

In recent years, several significant trends in the economy have contributed to the growth of wholesale trade: 1) the growth of mass production at large enterprises remote from the main users of finished products; 2) an increase in the volume of production for future use, and not for the fulfillment of specific orders that have already been received; 3) increasing the number of levels of intermediate producers and users, and 4) exacerbating the need to adapt goods to the needs of intermediate and final users in terms of quantity, packaging and varieties.