Chapter – 3 - Wholesaling - Contents

 Wholesaling Defined
 The Wholesaling Sector
 Selecting and Using Wholesalers
 The Paths of Renewal in Wholesale Distribution
 Definition: Wholesaling is concerned with the
activities of those persons or establishments
which sell to retailers and other merchants,
and/or to institutional, and commercial users, but
who do not sell in significant amounts to ultimate
consumers.
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Marketing Channels - Wholesaling

The U.S. Bureau of the Census categorizes

wholesale trade in three ways.
1. Manufacturers’ sales braches, who sell direct;
2. Agents and Brokers who sells goods but do not
carry the title
3. merchant wholesalers, who take title and usually
possession of goods for resale.

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Wholesaler Functions: Performed for
manufacturers

 Market coverage
 Sales Contract
 Inventory Holding
 Order Processing
 Market Information
 Customer Support

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Wholesaler Functions: Performed for
customers

 Product Availability
 Assortment Convenience
 Bulk-breaking
 Credit and Finance
 Customer Service
 Advice and Technical Support

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Types of Operation, Wholesale Trade

• Merchant Wholesaler
• Wholesale merchants or jobbers
• Industrial distributors
• Voluntary group wholesalers
• Importers
• Exporters
• Cash-and-carry wholesalers
• Retailer cooperative warehoused
• Terminal and country grain elevators
• Farm products assemblers
• Wholesales cooperative associations
• Petroleum bulk plants and terminals
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Types of Operation, Wholesale Trade

Agents, Brokers, and Commission Merchants:

• Auction companies
• Import agents
• Export agents
• Selling agents
• Merchandise brokers
• Commission merchants
• Manufacturers’ agents
Manufacturers’ Sales Branches and Offices
• Sales braches (with stocks)
• Sales offices (without stocks)
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Advantages that distributor chains have over small,
privately owned, single-warehouse firms:

 Inventory power -Chain inventories are not only deeper and cheaper
but also broader and more diversified.
 Large, linked warehouses -Improved warehouse efficiency by
adding highly sophisticated computerized systems, purchasing in
quantity and stock Large inventories, which result in lower
warehousing costs per unit.
 Quantity discounts -Chain wholesalers can purchase in large
quantities at bulk price and pass the savings on to customers.
 Multiple-brand coverage -Chain wholesalers typically have a
broader customer base, marking it more attractive for various
manufacturers to offer their brands to the distributor, resulting in a
greater variety of brands represented by the chin.
 Private labeling -This movement is particularly strong for product
lines such as bearings, electrical motors and equipment, and MRO
supplies because it offers lower prices to the customer.
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Choosing a source of supply:

Wholesale distribution chains incorporate many of

the attributes that are important to industrial
customers in choosing a source of supply.
 They are able to keep delivery promises,
 Offer a better discount structure,
 Maintain an efficient phone order system,
 Provide stock breadth and depth,
 Offer technical services, enact appropriate sales
procedures (e.g., regular sales calls),
 Maintain a strong assortment of brad names, offer quick
delivery time, and
 provide quality assurance.
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Key strategies adopted by wholesalers

 Focus Strategy: Many wholesalers have reevaluated

their basic strategic missions. Some have decided to spin
off or divest marginal or peripheral operations that did not
complement the company’s objectives and focus on
product assortments and market segments where they
have competitive advantage.
 Marketing Support Philosophy: The marketing
support-oriented wholesaler is willing to support any task,
activity, or function for either suppliers or customers that
will result in more effective and efficient marketing for the
entire channel.

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Key strategies adopted by wholesalers

 Exploring International Markets

 Deployment of Technology: Technology
encompasses everything from bar-coding and scanning
devices to fully automated warehouses, from electronic
data interchange links to communication satellites and
video text equipment. Technology can cut costs, increase
productivity, enhance information management, and
improve customer service and marketing
 Commitment to Total Quality Distribution

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