WHOLESALING

AND
RETAILING
Compiled by: Mr. Zamora, Mr. Magallanes and Mr. Arligue
Objectives
At the end of the lecture, the students must be able to:
1. understand how wholesaling and retailing works;
2. identify the types of wholesaling and retailing; and
3. differentiate and compare wholesaling and retailing.
WHOLESALING
What is WHOLESALING?
 It includes all the activities involved in
selling goods and services to those buying
for resale or business use.

 Firms engaged primarily in wholesaling

activities are called “wholesalers”
Wholesaling is concerned with the activities
of those persons or establishment that sell
to retailers and other merchants and/or
industrial, institutional and commercial
users but do not sell in large amounts to
consumers.

US Bureau of Census
WHOLESALER
They buy mostly from producers and sell
mostly to retailers, industrial consumers and
other wholesalers.

- as a result, many of the nation’s largest

and most important wholesaler are largely
unknown to final consumers.
Characteristics of WHOLESALER
1. Operate on large volumes but with chosen
group of products
Examples: food, grocery, pharma or auto parts,
clothing, etc.
2. The company itself, contracted parties or free-
lancers, can operate as wholesalers
3. Most B2B business– trade & institutions
4. Wholesaler could also be a retailer
Functions of Wholesaling

1. Sales and promotion of chosen company

products
2. Buying the assortment of goods
3. Breaking bulk to suit customer requirements
4. Storage and protection of goods till sold
5. Grading and packing of commodities
Functions of Wholesaling

6. Transportation of goods to customers

7. Financing the buying of customers
8. Bearing the risks associated with the business
9. Collecting and disseminating market information
to both suppliers and customers
Relationship of suppliers and
customers with wholesalers
Key tasks of Wholesalers
 Selling and promoting – wholesalers’ sales
force help manufacturers reach many small
customers at a low cost. The wholesalers has
more contacts and is often more trusted by the
buyer than the distant manufacturer.
Key tasks of Wholesalers
 Buying and assortment building – wholesalers
can select items and build assortments needed
by their customers, thereby saving much work.
Key tasks of Wholesalers
 Break bulking – wholesalers save their
customers money by buying in carload lots and
breaking bulk
Key tasks of Wholesalers
 Warehousing – wholesalers hold inventories,
thereby reducing the inventory costs and risks
of suppliers and customers
Key tasks of Wholesalers
 Transportation – wholesalers can provide
quicker delivery to buyers because they are
closer to buyers than are producers
Key tasks of Wholesalers
 Financing – wholesalers finance their
customers by giving credit, and they finance
their suppliers by ordering early and paying bills
on time.
Key tasks of Wholesalers
 Risk bearing – wholesalers absorb risk by
taking title and bearing the cost of theft,
damage, spoilage and obsolescence.
Key tasks of Wholesalers
 Market information – wholesalers give
information to suppliers and customers about
competitors, new products, and price
developments.
Key tasks of Wholesalers
 Management service and advice –
wholesalers often help retailers train their sales
clerks, improve store lay outs and displays, and
set up accounting and inventory control systems.
Types/Classifications of Wholesaling
Full service
 The full-service type of
wholesalers is, as the name
suggests, giving full service
to the end retailer.
 stocking, selling, offering
credit, delivery and
business assistance
 (company distributors,
wholesale merchants)
Types/Classifications of Wholesaling
Full service
Example – Samsung wants to
expand its operation in region A but it
does not have a sales office in that
region. So it appoints a distributor in
region A. This distributor is solely
responsible for order picking,
delivery, training sales
associates, promotions and
everything for the Samsung brand.
He is now a full-service wholesaler.
Types/Classifications of Wholesaling

Limited Service
 range of service is limited
 A limited service wholesaler
is someone who stocks the
products of the company and
sells it in a limited channel.
He does not have a large
turnover or does not cover
all channels of the company.
Types/Classifications of Wholesaling
Limited Service
 Example – Company X wants to
sell its products online but it knows
that if it allows local distributors to
sell online, there will be a huge
price war. As a result, Company X
appoints an exclusive online
wholesaler. This online wholesaler
has only one job – To purchase the
product and stock it and sell it
online. So whenever an order
comes from Amazon or eBay, this
wholesaler gives the machine to
Amazon or eBay. That’s his only
job.
Types/Classifications of Wholesaling
Merchant Wholesalers
 independent businesses
which include distributors &
jobbers, etc.
 Merchant wholesalers are
the ones who buy directly
from the manufacturer, store
the product and then sell it to
the customer. They might
sell in any channel and they
are not restricted to selling to
retail only or to online only.
Types/Classifications of Wholesaling
Merchant Wholesalers
Example – A vegetable
wholesaler buys produce directly
from the farm and stocks it at his
own warehouse. He then sells
these products to the local retail
outlets or even to end
customers. He may also sell to
restaurants. However, any loss
of the produce due to spillage or
any other reason is a cost to the
merchant wholesalers.
Limitations of Wholesaling
 Some of them do not give complete information
to suppliers for selfish reasons (during product
shortages)
 Cannot be relied on to do equitable distribution
 At times, do not want company and customers to
meet
 Tend to store goods and influence pricing.
Major Wholesaling Decisions
1. Which markets to operate in
2. Manpower to employ
3. What products to sell
4. Pricing decisions / Promotional support
5. Credit and collections
6. Image and customer perception
7. Warehouse location and design
8. Inventory Control
Wholesaling vs Retailing
1. Not too worried about location, ambiance or
promotions– prefer to be in the main market
2. Deal with other businessman & not to
consumers
3. Deal with a specific group of products only
4. Much larger trading area
5. Much larger transactions with suppliers &
customers
6. Believe in low margins but high volumes
RETAILING
RETAILING
• French word- Retaillier
• “break bulk”
 Characteristics of Retail Trade:
 The order sizes tend to be small but many
 The retailer caters to a wide variety of
customers and hence has to keep a large
assortment of goods
RETAILING

 Retailing – a set of business activities that

adds value to the products and services
sold to consumers for their personal or
family use.
 A retailer is a business that sells products
and/or services to consumers for their
personal or family use.
RETAILING
 A lot of the buying in the retail outlet could be on
impulse and hence managing inventory is
critical.
 Retailstore service personnel (in smaller stores)
and the goods displayed (in major stores) are
an important element of the selling process.
 The retailer’s strengths are in ensuring
‘availability’ and ‘visibility’ of the products he
sells – true for the corner grocery or the
supermarket.
RETAILING
• The target customer mix decides the
elements of the ‘marketing mix’ which the
retailer has to develop to optimize his
investment. The elements of the marketing
mix so designed, gives the ‘image to the
store.
RETAILING
Any business entity selling products and
services to consumers is ‘retailing’.
The goods may be sold in a shop, in person,
by mail, on the internet, telephone or a
vending machine.
Retail also have life cycle– newer forms of
retail come to replace the older ones– the
corner grocer may change to a supermarket
RETAILING
Includes all activities involved in selling or
renting products or services to consumers
for their home or personal consumption
The goods may be sold in a shop, in person,
by mail, on the internet, telephone or a
vending machine.
Retail stores are independent of the
producers – not attached to any of them.
How do Consumers Decide which
Retailer to Buy From?
 Price
- value offered, credit, special discounts
 Location
- convenience, parking, safety, stores
nearby
 Product Selection
- width & depth of assortment, brands,
quality
How do Consumers Decide which
Retailer to Buy From?
 Special Services
- home delivery, special orders, gift wrap,
valet parking
 Helpful salespeople
- courteous, knowledgeable, fast check-
out
 Fairness in dealings
- honesty, return privileges
CHARACTERISTICS OF RETAILING
Privacy Targeted
Individuals

Response Key Customized

Measurement Characteristics Offer
of
Direct Immediate
Testing Marketing Orders

Higher Continuous
Response Relationship
Classification of Retail Stores
Retail is usually classified by Types of
Products:
a. Food Products
b. Soft Products
- clothing, apparel, and other fabrics
c. Hard Goods – (hard line retailers)
- appliance, electronics, furniture,
sporting goods, etc.
CLASSIFICATIONS OF RETAIL FIRMS
• Traditional Retailer - (the grocer in your
locality) believes in high margin as his
volumes are limited
• Modern Retailer - Believes in large
volumes at low margins. He also tries to
control his costs but does not provide
personalized services
ROLE OF THE RETAILER
The retailer is able to provide the service to
the customers by the following:
1. Merchandising
2. The service
3. The format used
4. The communication process
used
Merchandise Offering
 Variety(breadth of merchandise)
- the number of merchandise categories
 Assortment (depth of merchandise)
- the number of items in a category

SKU (stock keeping unit)

- Identification of different items of
merchandise
Types of Retailers
1. Food Retailer
2. General Merchandise
Retailers
3. Nonstore Retailers
FOOD RETAILERS
 Conventional supermarket
- a self-service food store
 Supercenters

- provides one-stop shopping experience,

broader assortments of food and general
merchandise at attractive prices.
FOOD RETAILERS
 Warehouse Clubs
- retailers that offer a limited an irregular
assortment of food and general
merchandise with little service at low
process for ultimate consumers and small
businesses
 Convenience Stores
- enable consumers to make purchases
quickly
GENERAL MERCHANDISE RETAILERS
 Department Stores
- retailers that carry a broad variety and
deep assortment, offer customer service and
organize stores in distinctly separate
departments
 Specialty Stores
- concentrate on limited number of
complementary merchandise categories
GENERAL MERCHANDISE RETAILERS
 Category Specialists
- big box discount stores that offer a
narrow but deep assortment of merchandise
 Off-Price Retailers
- also known as closeout retailers, offer
an inconsistent assortment of brand name
merchandise at low prices,
GENERAL MERCHANDISE RETAILERS

 A special type of off-price retailer is the

outlet store.
 Outlet stores are offprice retailers
owned by manufacturers or retailers.
Those owned by manufacturers are
also referred to as factory outlets.
GENERAL MERCHANDISE RETAILERS
 Drug stores
- specialty stores that concentrate on
health and personal grooming merchandise
 Home improvement center
- a category specialist that offering
equipment and materials used by do-it-
yourself and contractors to make home
improvement
NON-STORE RETAILERS
 Electronic Retailing
- retailers communicate with customers
and offer products and service for sale
over the internet
 Catalog and Direct-Mail Retailers
- retail offering is communicated through
a catalog; direct-mail retailers through
letters and brochures.
NON-STORE RETAILERS
 Direct Selling
- interactive form of retailing which is
conveyed through face-to-face discussions with
salespeople.
 Television Home Shopping
- television program demonstrates
merchandise and place orders via telephone
 Vending Machine Retailing
- merchandise or services are stored in a
machine
Service Retailing
• firms that primarily sell
services rather than
merchandise, are a large and
growing part of the retail
industry.
Difference between Services and
Merchandise Retailers
 Intangibility
 Simultaneous Production and
Consumption
 Perishability
 Inconsistency
Major Classifications of Retail
Ownership
 Independent, single-store
establishments
 Corporate Retail chains
 Franchisees
Independent, single-store
establishments
 start-ups are owner-managed;
 has direct contact with customers;
 very flexible; react quickly to customers’
needs and market changes
Corporate Retail Chain
 Operates multiple retail units under
common ownership
 Centralized decision making for defining
and implementing strategies
 May be two stores or many thousands
Franchising

 Contractual agreement between franchiser

and a franchisee that allows franchisee
operate a retail outlet using a name and a
format developed and supported by the
franchiser
Thank you for listening. ;)