WEEK 12  It is a regular occurrence in industries such
MODULE 3: INTRODUCTION OF WHOLESALING
3.1 What is Wholesaling?
 Wholesaling is the distribution process of
wholesaler getting large quantities of goods
(either from the manufacturer or the agents)
and selling them to the retailers or other
professional business.
 In simple terms, wholesaling is the transaction
of large quantities of goods between a
wholesaler and the retailer or professional
business where the good is bought for the
resale purpose.
Wholesale is a channel of distribution where large
quantities of goods are sold to the retailers or to
industrial, commercial, or other professional
businesses which are not the end consumers.
Two key-phrases in this definition that separate
wholesale from retail are:
1. Large quantities of goods – Unlike
retailers, wholesalers deal with large
quantities of goods.
2. Retailers or businesses which are not
the end consumers – The transactions
take place with the parties that are not the
end consumers.
A wholesalers is a person or a business who
sells large quantities of goods to retailers or other
professional businesses which are not the end
consumers.
Remember:
1. Wholesale is a channel of distribution
2. Wholesaling is a business process
3. Wholesaler is a business or a person
Key Takeaways
 Wholesaling is the act of buying large
quantities of items from a manufacturer and
reselling them to merchants, who
subsequently sell them to consumers.
as banking and finance,
telecommunications, and energy, in addition
to physical product distribution.
 The common types of wholesalers include
merchant, merchandise agents or brokers,
manufacturer’s mini offices or branches,
and specialized.
 In some cases, producers and service
providers can be wholesalers. However,
given the cost of manufacturing and
machinery, operating expenses, and capital
requirements, it might be difficult for a
wholesaler to be a manufacturer.
3.2 How Does Wholesaling Work?
 Wholesaling means purchasing large
quantities of goods from the producer and
reselling them to retailers, who then sell
them to end-users.
 To begin, a wholesaler invests in buying
and storing large amounts of products. They
then profit from selling those products in
small quantities to merchants in a town, city,
or marketplace. The concept gained traction
in the 19th century, following the success of
mass production and marketing strategies.
WEEK 13
IMPORTANCE, FUNCTION AND
TYPES OF WHOLESALER
3.3 Importance of Wholesalers
1. Breaks down the bulk: Wholesalers buy in
bulk from the manufacturers, breaks it down
into comparatively small quantities and sell
them to different retailers.
2. Provide storage facility: Wholesalers move
the burden of storing away from the
manufacturers as they also provide storage
facilities to store the products.
3. Risk Bearing: Wholesalers bears the risk of
loss due to fluctuating demand and damaged
goods (during storage and transit). They also
take the responsibility of attracting retailers to
buy the product.
4. Maintain the demand-supply
stability: Wholesalers always have some
stock of the product with them. They make
 use of it to maintain the demand-supply
stability with retailers and end consumers.
3.4 Wholesaler Functions
1. Assembling: A wholesaler buys the
products from different manufacturers and
keeps them in one place.
2. Storage: There is usually a large time gap
between the production and consumption
of goods. The wholesaler maintains
demand-supply stability by storing a stock
of goods with them and delivering the
required amount to the retailers whenever
required.
3. Distribution: A wholesaler distributes the
assembled and stored goods to a large
number of retailers operating in different
places.
4. Transportation: Wholesalers usually
handle the transportation of goods from
their warehouses to retail shops.
5. Financing: Transactions between
wholesalers and retailers are usually made
on a credit basis where the wholesaler
provides certain credit to maintain good
relations with the retailers. He also usually
buys the goods on a cash basis from the
manufacturer to finance them.
6. Risk-Bearing: Wholesalers take the
responsibility of damaged goods during
transit and storage. Since he stocks a large
number of goods, he also bears the risk of
loss due to fluctuation demand.
3.5 The 7 Types of Wholesalers
Each industry witness different types of
wholesale businesses. While some work on the
lines of the usual distribution process, some find
other profitable lines. Here are 7 wholesaler types
that currently exist.
1. Merchant Wholesalers
 Merchant wholesalers are the most
common type of wholesalers who buy all
sorts of different and profitable items from
different manufacturers, store them, and sell
them to the retailers. They don’t have much-
specialized knowledge about the products
and usually operate in the FMCG industry
(Fast-moving consumer goods).
 These wholesale suppliers own and
produce a product or service and resell their
products to resellers, retailers, distributors
and other wholesalers. If you can buy the
products you require direct from the supplier
you will usually be able to obtain the best
prices and profit margins.
2. Speciality Wholesalers
Speciality wholesalers stock items
belonging to a specific industry or product category.
They are very knowledgeable when it comes to the
industry and the product and are usually found in
industries where selling efforts are required to
create demand among the retailers as well.
For example:
 If they sell groceries, they do not have a
variety of items but just sell tea or coffee.
 A speciality line wholesaler may
offer organic dairy and meat products
instead of a complete line of groceries.
3. Internet Wholesalers
 These wholesalers operate and conduct
transactions using the internet. They usually
sell the goods at a discounted price as they
save money by having virtual offices and
operating warehouses at places that don’t
charge much. Wholesalers who sell their
products on-line offer discounted prices as
they can reduce their overheads such as rent
and rates of physical premises.
 This type of wholesaler is therefore able to
add a lower percentage to their purchase
price and still make margin. Examples of
internet wholesalers are wholesalers on
Alibaba or Amazon for Business.
4. Full-Service Wholesalers/General
Wholesalers
 General merchandise wholesalers carry an
extensive variety of non-perishable products
like electrical supplies, hardware, plumbing
supplies, furniture, cosmetics, medicines,
and automobile equipment. With their broad
line of convenience and shopping goods,
general merchandise wholesalers serve
pharmacies, electric appliance shops,
hardware stores, and small department
stores.
  General merchandise wholesalers buy a
large volume of products from one or more
suppliers and add value to those products
by reselling in small quantities to WEEK 14
distributors, resellers and retailers. WHOLESALING VS RETAILING
 The most prevalent types of them are  Both wholesaling and retailing are
wholesale and industrial merchants: essential for a supply chain to function.
 A wholesaler focuses on maintaining
4.1 Wholesale Merchants: They
partnerships with retailers and
sell to retailers and are common in
manufacturers and serves as a conduit
hardware, pharmaceuticals, clothes, and
between them.
seafood businesses.
4.2 Industrial Merchants: They sell  Retailers do not contact company officials
to producers and are common in consumer directly in cases of product shortages,
durables, engineering, machinery, and supply concerns, price rises, discount
equipment businesses. offers, or complaints. Instead, they go to the
wholesaler.
5. Limited Service Wholesalers
These wholesalers offer fewer services to 3.6 Difference between Wholesaling and
their customers like only stocking, only delivering Retailing
etc. There are many types of limited-service
wholesalers like: Wholesaling Retailing

5.1 Cash-and-carry wholesalers – who handle  Buys products in  Buys products in

limited line of fast-moving goods, sell to small bulk from the bulk from the
retailers and don’t deliver goods (retailers have to manufacturer. wholesaler.
deliver the goods themselves).  Resell to retailers  Sell to consumers
at discounted at higher prices.
5.2 Truck Wholesalers – Who sell and deliver prices.  Connects the
the goods directly from their vehicles.  Connects the wholesaler with
producer with the the customer.
6. Discount Wholesalers retailer.  Small in size
These wholesalers deal in discounted stock.  Large in size  Requires less
Usually, the stock is discounted either because the  Requires more capital.
products are discontinued, refurbished, returned, or capital.  Higher profit
going to expire soon.  Lower profit margin
margin.
7. Dropship Wholesalers
Dropship wholesalers facilitate the process
 On the contrary, retailing simply refers to a
of dropshipping. They deliver the goods directly to
local shop owner who purchases large amounts
the end consumers when a retailer makes a sale.
of items from a wholesaler and sells them
They sign contracts with several internet-based
directly to consumers. End users see retailers
retailers and act as their warehouse and delivery
as the company’s face.
partner and only charge money whenever a sale is
made. That is, even though they are wholesalers,  When wholesalers acquire a good deal or a
they sell small quantities of goods. discount on purchasing items from a company,
they pass it on to retailers. Merchants then pass
it on to end customers, ensuring profit and
fairness for all.
Other striking differences between wholesalers and
retailers include:
 Wholesalers resale products in bulk and at
lower prices to retailers, industries, and other
groups since they incur no further expenditures.
Due to additional costs, retailers sell items in
 smaller quantities and at higher rates to end
customers.
 Wholesaling companies function as a go-
between for producers and retailers. Retailers
act as a go-between for wholesalers and
customers.
 Wholesalers are often enormous, need a
significant amount of money, and have
lower profit margins. Retailers are small
businesses with low capital requirements and
high-profit margins.
 The biggest difference between wholesale vs.
retail is in the type of buyer. While retail
involves selling products directly to the end
consumer, wholesale involves selling products
in bulk to other businesses such as retail
stores.
WEEK 15
MODULE 4 – INTRODUCTION TO RETAILING
4.1 Introduction to Retailing
What is Retailing?
 Retailing is a distribution process, which
encompasses all activities involved in
selling goods directly to the end consumer,
who intends to use the product. It involves
the sale of goods and services from the
point of purchase to the user of the product.
 In simple terms, retailing refers to the
transaction of small quantities of goods
between a retailer and a customer, where
the intention is to buy the goods for
personal use.
 On the other hand, a retailer can be defined
as any person/organization whose primary
source of revenue comes from retailing.
Within the supply chain, retailers serve as
the final link between manufacturers to the
end consumer.
 Retailers are the important link between
manufacturers and customers. They are the
final point of sales and are invaluable to the
entire distribution channel. They, in fact,
provide services to both the wholesalers
and the consumers.
In order for a retail business to be successful
and earn revenue, it must know its customers. Two
things that go hand-in-hand in helping a store do
that are implementing the correct store layout
and understanding customer flow.
1. Store layout is the design of a store’s
floor space and the placement of items
within that store. Store layout helps
influence a customer’s behavior, which
means when done right, it’s a key strategy
to a store’s prosperity. Store owners choose
where the best spots are to place their
merchandise, and this helps them design
their customer flow, as well as the ambiance
(ambiance also plays a huge role in
restaurants as well!) within their store.
2. Customer flow is the number and pattern
of customers coming into or passing
through a store. There are a few ways a
store can monitor its customer flow,
including time lapse, closed-circuit
television, observation, an analysis of
purchase data and or even somewhat
controversially through your
smartphone. Understanding customer flow
gives a store owner information on flow
patterns, the number of visitors, areas that
are highly visited or not visited, as well as
other types of customer behavior.
 When a store understands its customer
flow, it’s also able to understand if the
placement of its merchandise, or its
store layout, is working correctly.
 Store layout planning is the process of
designing a store to maximize your space.
This process combines aesthetic principles
with psychology to produce layouts
that keep customers engaged with a
store. Effective store layout planning directs
customer traffic through the store in a way
that doesn't make your inventory feel
cluttered. It also highlights the products that
you want customers to focus on by drawing
their line of sight towards specific aisles or
shelves.
 Before looking at specific layouts, it's
helpful to read about the concept of
customer flow. Customer flow is the
pattern that your customers travel when
walking through a store. Effective store
layout planning keeps customers moving
through the store in a way that highlights
your products. In larger stores, customer
flow designs might include rest areas with
 seats or couches where customers can sit
down before continuing through the store.
4.2 Types of Store Layouts
1. Grid. The grid layout places counters and
shelves in long rows throughout a store,
which makes shoppers go up and down the
various aisles created. This layout, as
explained below, is almost always how
grocery stores are set up.
2. Loop. The loop layout or race track as it’s
also known, has one major aisle that starts
at a store’s entrance and loops all the way
around the store (think Ikea), taking the
customer back to the entrance.
3. Spine. The spine layout has one major
aisle that runs from the front of the store to
the back with different departments of
merchandise branching off to the sides.
4. Free-flowing. The free-flowing layout,
great for smaller businesses and sparking
impulse buying, is where merchandise,
fixtures and other items a store wants on
display are grouped together in a free-
flowing pattern throughout the store. The
emphasis is on open space and letting the
customer wander through the seemingly
random placement of products when in
reality every detail is still carefully planned.
4.3 Characteristics of Retailers
1. Small Quantity: Retailer provides goods in
small quantities as per customers’ needs, if
retailers won’t exist in the supply chain then
it would become very inconvenient or
customers to purchase the product.
2. Mediator: Retailer buys products from the
manufacturer in large amounts and sells
them in small quantities to consumers.
Retailer helps in easy access to products
manufactured. He acts as the middleman
between the manufacturer and the
consumer.
3. Branding and Marketing: Retailers help in
brand promotion and marketing. They
create brand awareness through store
displays, advertisements, hoardings, and
other promotional activities.
4. Personal Contact: Retailers maintain
personal connections with consumers,
which helps them to know trends and
changing requirements of the customers.
Customers trust retailers more than
producers and wholesalers. Retailer hence
provides all feedback to the manufacturer.
5. Economic Growth: Retailers facilitate
payment processing, which ensures smooth
and secure transactions for customers.
Retailers contribute to economic growth by
generating sales revenue and creating job
opportunities in the retail sector.
4.4 Functions of Retailers
All retailers deal with the customers of
varying tastes and temperaments. Therefore, they
should be active and efficient in order to satisfy
their customers and also to induce them to buy
more.
1. Buying and Assembling of goods:
Retailers buy and assemble varieties of
goods from different wholesalers and
manufacturers. They keep goods of those
brands and variety which are liked by the
customers and the quantity in which these
are in demand.
2. Storage of goods: To ensure ready supply
of goods to the customer retailers keep their
goods in stores. Goods can be taken out of
these stores and sold to the customers as
and when required. This saves consumers
 from botheration of buying goods in bulk
and storing them.
3. Credit facility: Although retailers mostly
sell goods for cash, they also supply goods
on credit to their regular customers. Credit
facility is also provided to those customers
who buy goods in large quantity.
4. Personal services: Retailers render
personal services to the customers by
providing expert advice regarding quality,
features and usefulness of the items. They
give suggestions considering the likes and
dislikes of the customers. They also provide
free home delivery service to customers.
Thus, they create place utility by making the
goods available when they are demanded.
5. Risk bearing: The retailer has to bear
many risks, such as risk of:
 Fire or theft of goods
 Deterioration in the quality of goods
as long as they are not sold out.
 Change in fashion and taste of
consumers.
6. Display of goods: Retailers display
different types of goods in a very systematic
and attractive manner. It helps to attract the
attention of the customers and also
facilitates quick delivery of goods.
7. Supply of information: Retailers provide
all information about the behavior, tastes,
fashions and demands of the customers to
the producers through wholesalers. They
become a very useful source of information
for marketing research.
4.5 Types of Retailers
1. Department store. A department store is a
retail establishment offering a wide range of
consumer goods in different areas of the store,
each area specializing in a product category.
2. Specialty store. A specialty store is a
shop/store that carries a deep assortment of
brands, styles, or models within a relatively
narrow category of goods. Furniture stores,
florists, sporting goods stores, and bookstores
are all specialty stores. Stores such as
Athlete’s Foot are considered superspecialty
stores.
3. Warehouse store. A warehouse store or
warehouse supermarket is a food and grocery
retailer that operates stores geared toward
offering deeper discounted prices than a
traditional supermarket. These stores offer a
no-frills experience and warehouse shelving
stocked well with merchandise intended to
move at higher volumes
4. Factory outlet. An outlet store, factory outlet
or factory store is a brick and mortar or online
store where manufacturers sell their
merchandise directly to the public.
5. Grocery Stores. A grocery store, grocery
shop or simply grocery is a foodservice retail
store that primarily retails a general range of
food products, which may be fresh or
packaged. In everyday U.S. usage, however,
"grocery store" is a synonym for supermarket,
and is not used to refer to other types of stores
that sell groceries.
6. Supermarket. A supermarket is a self-service
shop offering a wide variety of food, beverages
and household products, organized into
sections. This kind of store is larger and has a
wider selection than earlier grocery stores, but
is smaller and more limited in the range of
merchandise than a hypermarket or big-box
market.
7. Convenience store. A convenience store,
bodega, convenience shop, corner store or
corner shop is a small retail store that stocks a
range of everyday items such as tea, coffee,
groceries, fruits, vegetables, snacks, etc.
8. Chain store. A chain store or retail chain is a
retail outlet in which several locations share a
brand, central management and standardized
 business practices. They have come to industrial parks on the outskirts of cities,
dominate the retail and dining markets and towns, or villages.
many service categories, in many parts of the
world.

9. Hypermarket. A hypermarket is a big-box

store combining a supermarket and a
department store. The result is an expansive
retail facility carrying a wide range of products
under one roof, including full grocery lines and
general merchandise.
10. Shopping mall. A shopping mall is a large
indoor shopping center, usually anchored by
department stores. The term "mall" originally
meant a pedestrian promenade with shops
along it, but in the late 1960s, it began to be
used as a generic term for the large enclosed
shopping centers that were becoming
commonplace at the time
11. Discount store. A discount store or discounter
offers a retail format in which products are sold
at prices that are in principle lower than an
actual or supposed "full retail price".
Discounters rely on bulk purchasing and
efficient distribution to keep down costs.
12. Online shopping. Online shopping is a form
of electronic commerce which allows
consumers to directly buy goods or services
from a seller over the Internet using a web
browser or a mobile app.
13. Superstore. A superstore or big-box store is a
physically large retail establishment, usually
part of a chain of stores. The term sometimes
also refers, by extension, to the company that
operates the store. The term "big-box"
references the typical appearance of buildings
occupied by such stores
14. Warehouse club. A warehouse club is a retail
store, usually selling a wide variety of
merchandise, in which customers may buy
large, wholesale quantities of the store's
products, which makes these clubs attractive
to both bargain hunters and small business
owners
15. Warehouse. A warehouse is a building for
storing goods. Warehouses are used by
manufacturers, importers, exporters,
wholesalers, transport businesses, customs,
etc. They are usually large plain buildings in