6.
The Financier - they pay cash for goods they
THE WHOLESALE TRADE
Wholesale trade is the selling of goods to
another trader in large quantities.
FUNCTIONS OF THE WHOLESALER
The Wholesaler is a middleman placed in
between the producers and retailers. Some of
the functions are as follows:
1. Warehousing - The wholesaler stores goods
and keeps them safe until they are required
by the retailers and consumers. This
relieves the retailers of storage and
insurance costs leading to improved
profits/however this may affect the
wholesalers negatively as goods may be
damaged or expire while in there leading to
a loss
2. Risk bearing-wholesalers buy goods in
large quantities from manufacturers and
put them in warehouses-goods may
become obsolete or out of demand leading
to them making a loss.
3. Breaking bulk - wholesalers buy goods from
the producers in large quantities and sell
them to retailers in relatively smaller
quantities leading to them buying in large
quantities.
4. Providing a variety of goods- Wholesalers
provide the retailers with a wide variety of
goods from which to choose leading to
increased sales since they buy from
different manufacturers.
5. Information -The wholesaler informs the
manufacturers whenever there is a change
in the demand for a product and informs
the retailers of any new changes in products
or new products introduced in the market.
It provides feedback from customers on the
quality and quantity of the product.
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buy from the manufacturers leading to
manufacturers having sufficient working
capital/sell to retailers on credit- production
is not interrupted-however retailers may
take long to pay leading to them having
insufficient working capital
7. Transport: - wholesalers operate their own
fleet of trucks which the use to collect the
goods from the factories and can deliver to
the retailers relieving them of transport
costs/however this can cost the wholesalers
some money as they have to pay drivers
and maintain trucks leading to reduced
profit.
8. Marketing: - Wholesalers buy goods from
the manufacturers as soon as they are
produced. They then advertise and market
them on behalf of the manufacturers-
attracting customers leading to them
buying-however advertising may cost the
wholesaler some money
TYPES OF WHOLESALERS
Cash-and-Carry Wholesalers
They sell their goods strictly on cash and do not
provide transport or delivery. Examples in
Botswana include trade world, Trans Africa,
Metro etc.
Features of cash and carry wholesalers
❖ They sell mainly groceries.
❖ They do not offer credit and delivery
facilities so they tend to be cheap
❖ They buy in large quantities and sell in small
quantities.
❖ They usually serve local markets as they do
not provide transport
General Wholesalers
They sell a wide range of goods. Their main
features are as follows:
❖ They are run by large companies who
have huge capital.
❖ They are usually very large and may
operate on a regional or national basis.
❖ They often send their salesman around
to obtain orders from retailers.
❖ They normally offer regular customers
short - term credit facilities.
Specialist Wholesalers
These are wholesalers who specialize in a
limited range of one line of goods although they
provide a wide variety of goods. For example -
Builders Merchants Botswana (BMB), Builders
world and cash build sell only building materials
and equipment. However, they provide many
different varieties of building materials and
equipment which customers can choose from
COOPERATIVE WHOLESALE SOCIETY:
wholesales owned and controlled by retail
cooperative societies run on the cooperative
principle of ownership, operation and
distribution of profits.
Factors leading to the elimination of the
wholesalers
Wholesalers may be eliminated under the
following circumstances:
❖ When manufacturers appoint agents to sell
their products- the producers want to
maintain a high quality of customer service.
E.g. Computers leading to more being
attracted hence an increase in sales,
however agents must be paid commission
which may reduce profit made
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❖ When manufacturers sell direct to
consumers through mail order-
advertisements of goods are placed in the
media and customers place orders of what
they want- goods delivered to them
through the post office relieving them of
transport cost. But it is not easy to inspect
the quality of goods
❖ Manufacturers may also sell direct to
consumers through their own retail outlets.
❖ If transport and communication are
efficient between the producers and
retailers-retailers can restock quickly, direct
from producers leading to them meeting
demand in the market. But all can incur
transport cost which reduce their working
capital
❖ When producers sell perishable and fragile
goods-may get damaged or spoiled if they
stay long on transit leading to a loss-
Implications of the elimination of the
wholesaler
❖ Goods can be bought through the
internet (e-commerce)-can attract
many people leading to increased sales
but may be expensive to the producer
as they will incur advertising and
transports costs
❖ Shortening the supply chain-consumers
can get fresh goods and be able to meet
their needs-but
❖ Small retailers would suffer because
they don’t purchase in large quantities
❖ Producers may have to deal with many
retailers at a time which may lead to
poor customer service/this may lead toi
loss of business but some retailers may
benefit by getting information from the
manufactures to help improve their
products.
❖ Some retailers may cut costs by buying
at factory price leading to lower prices
hence cheaper products for customers
 but some retailers do not have capital
to buy in bulk from producers.
❖ Some retailers lack space to hold large
stock hence cannot serve their
customers when there is shortage
however large-scale retailers with
bigger space would benefit from bulk
buying.
❖ Large scale retailers will become
wholesalers which in turn affect the
small-scale retailers because they have
to buy from them at higher prices which
might lead to decline of small-scale
retailers.
❖ Producers will have to hire agents to
market their products this will increase
their operational costs hence reduced
working capital.
The survival of wholesaler
Since the business of wholesaling is under ever
increasing pressure, the wholesalers themselves
are aware and doing something about it. One of
the strategies adopted by wholesalers:
❖ forming voluntary chains- small retailers
will place an order with them
❖ try to reduce costs-by find cheaper
suppliers
❖ Offer discounts, credit, delivery and
special offers-attract customers leading
to increased sales/ but some customers
may fail to pay on time leading to
shortage of working capital
❖ Launch advertising campaign-make
people aware of what they are selling-
leading to them buying but advertising
may not bring desired results
MARKETING BOARDS
Marketing boards are trading organizations set
up by an act of parliament to handle the sales of
agricultural produce. In Botswana, The
Botswana Agricultural Marketing Board (BAMB)
handles the sale of sorghum, maize and pulses.
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E.G. BAMB - Botswana Agricultural
Marketing Board handles the sale of sorghum,
maize and pulses.
BMC- Botswana Meat Commission
handles the sale of beef and beef by products
The main reasons for the establishment of a
marketing board are as follows
1. To arrange the orderly marketing of
agricultural produce.
2. To ensure a steady supply of produce
throughout the year, especially those which
are produce seasonally.
3. To maintain quality of products-carryout
research and regular inspection of goods-
goods yield by farmers however farmers
may choose not to use information given to
them leading to them producing poor
quality products.
4. To provide transport for collecting produce
from the farmers-as they own fleet of
trucks-farmers are relieved of transport
cost-however marketing boards may have
increased transport costs.
5. To provide storage facilities
The functions of marketing boards
1. Collection and storage of produce: - They
own fleet of trucks they use to collect
produce from the farmers and store them
in their depots-this relieves the farmers of
the problem of both storage and transport
but they can take time to collect the
produce leaving farmers with no money to
continue producing
2. Research on better farming methods and
give information to farmers which leads to
 better and quality yields will be produced
but farmers may not use the information
given to them leading to poor yield.
3. Buying produce from the farmers] as soon
as they are harvested, this guarantee ready
market for the farmers produce thereby
stimulating production however prices are
set by the board and may be too low.
4. Provides inputs to farmers at reasonable
prices as a result farmer are able to buy
expensive farm inputs such as tractors for
mass production however farmers have to
contribute part of the purchase price which
can be expensive to the farmer.
5. Control of production the board controls
production in order to avoid either
overproduction or under production which
may lead to price fluctuations so this helps
even out supply hence stable prices for
consumers however by discouraging over
production allows prices to go up beyond
the means of poor consumers.
6. Provides transport to farmers by collecting
the farm produce since most farms are
located in remote areas but it might be
expensive / not readily available
7. storage of produce in their silos/depots
which relieves the farmers the problem of
both storage / keeps produce free from pests.
BOTSWANA MEAT COMMISSION [BMC]
It handles the sale of beef and beef byproducts
throughout the world.
INPUTS OF BMC
• Cattle
• Small livestock [goats/sheep]
OUTPUTS OF BMC
• Corned beef
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• Boneless beef
• Canned tongue and hides
• Pet food
• Carcass meal
BENEFITS OF BMC TO BOTSWANA ECONOMY
• Source of employment hence those
employed earn income to improve their
standard of living.
• Source of foreign exchange through
exportation of beef which can be used
to pay for imports.
• Provides ready market for livestock
therefore help stimulate livestock
farming in Botswana.
• Produces beef of high quality making
the country self-sufficient in beef.
PROBLEMS FACED BY BMC
• Competition with local butcheries lead
to failure to meet the EU quota hence
loss of market.
• Drought lead to loss of cattle hence
decrease in sales.
• Outbreak of foot and mouth disease
force closure of abattoirs and
suspension of beef exports to EU
markets hence loss.
• Farmers failing to meet the set health
and safety requirements to supply their
cattle thus reducing total output hence
decrease in sales.
COMPUTERS IN TRADING
The computer is an electronic device that can
handle large amount of information.

Computer technology can be used

to/importance of computers in trading The importance of computer in e-commerce

1. Store data – business records may be stored

for future use-easy to retrieve it however
computers may be affected by virus leading
to loss of information.
2. Process data-so as to make information
easy to understand like preparing accounts-
but it is expensive to buy other programmes
which may cost the business some money
3. Carry out business correspondence-trade
becomes easy between them leading
effective business operations however
computers may be affected by network
failure leading to delay in communication.
4. Advertise and market goods on the
internet-which make people aware of the
products and attracting them to buy leading
to increased sales however not all people
have computers and may not see the
advertisement and may not buy leading to
poor sales.
- The net works 24 hours-consumers will buy at
any time and no need for them to visit the
shops but shop online, this saves them money
and time/increased sales to the trader however
network may be affected by bad weather and
interrupt business operations leading to poor
sales
-A large range of goods can be sold through the
internet-people have their choices/preferences
met- more customers attracted to buy-however
customers are uncertain about the quality of
goods which may not meet their expectations.
-Traders have extended market share-many
people buy online leading to increased sales
however not all people have access to internet
and may not see the goods and not buy leading
to poor sales.
Refer to notes on e-commerce in trends in
retailing

5. Research on how to improve production

hence business stand a chance in
succeeding.

6. E-commerce/can sell goods online which

widens the market but customers are
skeptical about e-commerce.

7. Transmission of business
information/communication resulting in
accurate information passed between
customers and the business but it could be
expensive to install.

8. Can be used for online banking which saves

time for going to the bank however the
business account may be hacked.