COURSE TITLE-

 
BASIC OF SUPPLY CHAIN
MANAGEMENT
 
 
  
 
Course code – 26138
 Unit 4 – Wholesaling and Retailing

Meaning and concept of wholesaling , types of wholesalers

Meaning and concepts of retailing – Types of retailers , Concept
and specification , Convenience store , departmental store ,
Shopping Malls and specialty stores and non – store based
retailing.
Wholesaling –

Meaning and concept –

Wholesaling is defined as purchasing goods directly from the manufacturer at

a discount and then selling it to retailers for a comparatively higher price.

Wholesaling or distributing is the sale of goods or merchandise to retailers ,

to industrial , commercial , institutional or other professional business users ,
or to other wholesalers.

Wholesaling is one step in the supply chain , which also includes suppliers of
raw materials , manufacturers of finished goods , and retailers to end – users.
Retailers purchase goods from wholesalers and sell them at a high price to
cover cost and generate profits.
Next, the wholesaler will sell to the retailer at a higher price while providing
some discounts, similar to those received from the manufacturer when
receiving such goods in bulk. For instance, D Mart will purchase a bulk
quantity of products from their wholesalers. In place of buying just a few, it
will receive discounts for the product quantity. 

Wholesalers are not manufacturers. Their business is distributing the end

products. They purchase goods from manufacturers in bulk at a discount and
sell to retailers.

Wholesalers also provide cost savings to retailers when retailers buy in bulk
from the wholesaler. The retailer then repackages the bulk items into smaller
quantities for sale directly to consumers.

Wholesaling is one step in the supply chain that starts with a supplier of raw
materials and ends with a sale to an end-user.
How does Wholesaling Work? 

A wholesaler can offer just one product, one product line, or provide various products.
There are some wholesalers who work as middlemen between the retail and wholesale
businesses that have the requirement of various goods, or different elements of goods that
one can procure from just one source. Key points to remember
Wholesaling involves the distribution of products in large quantities to various firms that
further package them in lesser quantum, and sell them to the final customers.

Wholesaling is considered to be one major element in the supply chain that commences
with the supply of raw materials, and finishes when the final sale is made to the customer.

Wholesalers main task is to distribute the final products.

It is not mandatory for wholesalers to produce the goods they sell.

They purchase them from the original source, and focus on selling and delivering the
products in bulk. A wholesaler is not the authenticated distributor for the product line of a
specific brand. The wholesaler doesn't provide any assistance related to the product, and
he or she may not have a direct relationship or connection with the firm from where it buys
goods. Sometimes, he or she may not be completely familiar with the products. The
wholesaler focuses on selling quality products.
Wholesaling Definition -

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 businesses.
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.

Types of Wholesaling -

1. Merchant Wholesaler
2. Full – service wholesaler
3. Specialized wholesalers
4. Internet Wholesalers
5. Limited Service Wholesalers
6. Discount Wholesalers
7. Brokers and Agents
1. Merchant Wholesalers –

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.

E.g.. – A Vegetable wholesalers buys produce directly from the farm and stocks it at his own warehouse. He then sells
these produce to the local retail outlets or even to end consumer. He may also send to restaurants. However , any loss
of the produce due to spoilage or any other reason is a cost to the merchant wholesalers.

2.  Full-service Wholesalers –

They are most commonly observed in Consumer Durables or Engineering products. The full-service type of
wholesalers is, as the name suggests, giving full service to the end retailer. These wholesalers mainly operate in the
retail market and sell products to a reseller (a retailer in this case) Everything except service of the product is the
responsibility of the full-service wholesaler.
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. However, for service of the product, there is a different service
franchise opened in the same region.
In real life scenario, Many full-service wholesalers also start a second services
related business and start giving services for the products they are wholesaling.
Example – A Samsung wholesaler also starting a service center of Samsung.
As a result, they might get both – sales and service orders. However, for
theoretical purposes, Servicing and maintenance of the product is not a part of a
full-service wholesaler. He is mainly for sales, deliveries, and financing.

3. Specialized wholesalers -

These are wholesalers who do wholesale of specialized items only. Example – A

used car wholesaler who sells directly to customers or to other used car dealers.
He is specialized in used cars and knows the ins and outs of selling a used car to
consumers or refurbishing the used cars.
Similarly, there are other specialized wholesalers who are known for the specific product that they sell.

Specialty wholesaler specialize in a specific industry or product type they tend to have good product knowledge and good pricing .

4. 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.

Examples - internet wholesalers are wholesalers on Amazon for Business.

5. Limited Service Wholesalers

These wholesalers offer fewer services to their customers like only stocking, only delivering etc. There are many types of limited-service
wholesalers like –
Cash-and-carry wholesalers – who handle limited line of fast-moving goods, sell to small retailers and
don’t deliver goods (retailers have to deliver the goods themselves).

Truck Wholesalers – Who sell and deliver the goods directly from their vehicles.

Logistic Wholesalers – A Milk wholesaler who delivers whole trucks of milk across the market. His only
work is to deliver the milk and not to get orders for the company.

6. Discount Wholesalers

These wholesalers deal in discounted stock. Usually, the stock is discounted either because the
products are discontinued, refurbished, returned, or going to expire soon.
7. Brokers and Agents –

A Broker has the producer or manufacturer of a commodity on one side and

the buyer of the commodity on the other side. All brokers and agents take on
no risk . A broker or agent has to work on getting the deal confirmed.

After the deal is cracked , the broker earns a commission on the said deal. An
agent or broker is very commonly observed in chemical markets or the real
estate industry.
Retailing –

Meaning and concept –

A retailer is a person or a business who sells small quantities of goods to the
customers for actual use.

The distribution of finished products begins with the producer and ends at the
ultimate consumer. Between the two of them, there is a middle person—the retailer.

Retailing is defined as a set of activities or steps used to sell a product or a service to

consumers for their personal or family use. It is responsible for matching individual
demands of the consumer with supplies of all the manufacturers.

Retailing can be defined as the buying and selling of goods and services. It can be
defined as the timely delivery of goods and services demanded by consumers at
prices that are competitive and affordable.
Retailing involves a direct interface with the customer and the co-ordination of
business activities from end to end – right from the concept or design stage of a
product or offering to its delivery and post – delivery service to the customer .

Retailing is the distribution process of retailer getting the goods (either from
the manufacturer, wholesaler, or agents) and selling them to the customers for
the actual use.

In simple terms, retailing is the transaction of small quantities of goods

between a retailer and the customer where the good is not bought for the
resale purpose.

Retailing is a set of activities performed in selling the goods and

services directly to the end users. The goods and services sold to the
consumers are meant for their personal use and not for resale or
business activity. Retailing is the last activity conducted in the chain of
product distribution.
A retailer is a person, agent, agency, company, or organization ,which is
instrumental in reaching the goods , merchandise ,or services to the ultimate
consumers.

Retailers perform specific activities , such as anticipating customers wants ,

developing assortments of products , acquiring market information and financing.

A common perception is that retailing involves only the sale of products in stores.
Retailing encompasses selling through the mail , the internet ,door to door visits
any channel that could be used to approach the consumers. When manufacturers
like Dell Computers sell directly to the consumer , they too become retailers.
The term retailer also implies that he deals directly with the end-user or
consumer. Being the last link in the distribution channel by which the
manufacturer reaches the end-user consumer , the retailer has more
knowledge of the customer’s wants and needs and can influence the end
user’s buying decision.

Any business entity selling to customer is “ retailing “ . Retailers focus on

location , type of customer targeted , the product offering , customer
communication , promotions and as some of the factors in designing their
marketing strategies.
Retailing Examples -
The most common examples of retailing are the traditional brick-and-mortar stores like
Walmart, Best Buy, etc. But retailing isn’t limited to them. It also includes, online
marketplaces like Amazon and eBay, and even the restaurants which sell food and
service.

Definitions of Retailing:

1. According to W.J. Stanton, “Retailing includes all activities

directly related to sales of goods or services to the ultimate
consumer for personal a non-business use”.

2. According to Cundiff and still,” Retailing consist of those

activities involved in selling directly to ultimate consumer.”
Types of Retailers –

There are different types of retailers that specialize in various sales techniques
and cater to different consumer types. They each provide different experiences—
sometimes offering direct purchasing from a manufacturer, or providing a wide
range of merchandise. Others are based more on convenience.

1.Department Stores
Traditional department stores sell a wide range of merchandise that is arranged
by category into different sections in the physical retail space. Some department
store categories include shoes, clothing, beauty products, jewelry, housewares,
and more.

2.Grocery Stores and Supermarkets

These retailers sell all types of food and beverage products, and sometimes also
home products and consumer electronics as well. 
3.Specialty/Outlet Retailers
These specialize in a specific category and brand-name products. Victoria's
Secret and Nike are examples of specialty retailers, generally selling only
merchandise that carries their brand name or is associated with it.

4.Discount Retailer
Discounters sell a wide variety of products that are often privately labeled or
generic brands at below-retail prices. Discount store is a retail store that sells
products at prices lower than those asked by traditional retail outlets.
Therefore discount stores are a category of retail stores where retailers sell
merchandise at discounted price.
5.Internet/Mobile Retailer
Internet shopping websites ship the purchases directly to customers at their homes or workplaces, without the expenses of
traditional brick-and-mortar retailers. They usually sell merchandise for a lower-than-retail price, using warehouses for storage
and developing relationships with warehouses, vendors, and sometimes manufacturers to provide goods at reduced prices.

6.Convenience Retailer
For on-the-go consumers, these are usually a retail location that primarily sells gasoline—they sell a limited range of grocery
merchandise and auto care products at a premium "convenience" price.

.
Convenience Stores –

A convenience store can be defined as a retail business designed by keeping the

convenience of its customers in the center. Therefore, these stores are located at
convenient locations where people can quickly purchase a vast number of products
such as grocery items, food, and gasoline, etc.

A convenience store or shop is a retail shop usually located around the corner of
live. It stocks all the essential goods such as groceries items like eggs, bread, butter,
and milk, over-the-counter medicines, coffee, snacks, tobacco products, and soft
drinks, etc. Convenience stores generally charge higher prices than supermarkets
for similar products like milk, eggs and bread.

Some convenience stores also sell alcohol. However, it is not permitted in every
jurisdiction. Some convenience stores sell limited alcoholic products, the products
that have low alcohol content in them such as beer and wine.

The convenience stores are different from general stores and village stores because
the convenience stores are not located in rural areas and are used as an alternative
to the larger stores.
In some countries, convenience stores are part of gas stations or petrol
stations, so that people can buy the goods that they need on the go or while
filling their vehicle’s tank with fuel. Such convenience stores can be located
alongside a road, a bus or rail station, or near any other transport facility.

Convenience stores not only provide all the convenient stuff but also offer
service to their customers for long hours. Many convenience stores remain
open for 24 hours. That means a person can buy any goods at any time of the
day.

people prefer to purchase goods from convenience stores only in

emergencies as these stores sell products at a little higher price than the price
provided by supermarkets or conventional grocery stores. The reason behind
this is that these stores usually buy goods in small quantities as compared to
supermarkets. Therefore, they are required to pay a high price per unit they
purchase to the wholesaler. That does not mean that a convenience store is
not a profitable business. They make for their loss by remaining open 24
hours of a day, serving at more locations, and having small cashier lines.
Departmental Store –

These stores are generally incredibly huge stores and sell a very wide variety
of products. These products are organized into categories, or rather into
‘departments‘. And all these departments are under the same roof.

Generally, a department store will sell everything from womenswear,

menswear, electronics, toys, homeware, bed and linen, kitchen appliances,
footwear, accessories, cosmetics and many more such things.

Every department will be an independent unit by itself, united under one roof

in one store. A classic example of such a departmental store is Macy’s. In
India, we could cite the example of Big Bazaar or Central stores.

Departmental store sold both soft goods ( nondurable and consumable goods
) , which have a shorter lifespan such as cosmetic , clothing and hard goods
also known as durable goods , which are manufactured items that are
expected to last several years such as appliances , furniture and consumer
electronics.
Department stores are retailers that carry a broad variety and deep assortment, offer
customer services ,and organize their stores into distinct departments for displaying
merchandise.

In broad terms , a department store is a large-scale retail outlet , often multi-levelled ,

whose merchandise offer spans a number of different product categories. Traditionally ,
department stores can be defined as averaging 7000 sqm , selling at least fashion clothing ,
accessories , cosmetics , household goods and often a much broader assortment , from
more or less separate departments on several floors. The department store also offered new
customer services never before seen such as restaurants , restrooms , reading rooms , home
delivery , wrapping services , store hours , new type of merchandise displays and so on .
Advantages of Departmental Stores

Convenience for Customers: One of the largest draws of the departmental store

is that a customer can fulfill all their shopping needs under one roof. It saves
the customer from the trouble of visiting numerous stores. It saves time and
labour for the customers.

Variety of Choices: A departmental store not only sells a variety of products but
also ensures their customers are spoilt for choices in every type of product.
E.g..-if one was looking to buy a TV, a departmental store would allow they the
choice from dozens of different models.

Economies of Scale: Departmental stores are run on a huge scale. So they can
enjoy all the benefits of a large-scale operation, like lower costs due to high
volumes. This allows them to lower their overall costs and increase their profits.

Promotions: Departmental stores have financial capabilities to run their very

own promotions and advertising campaigns. This helps them attract more
customer and hence further boost their sales.
Disadvantages of Departmental Stores

Operating Costs: These stores not only sell goods, they provide their
customers with special services. And so the operating costs of a departmental
store tend to be high. They cannot offer any discounts or offers and price
themselves out when it comes to lower-income customers.

Lack of Personal Attention: Due to their large scale of operations and sheer

size of their stores it may not be possible to provide each and every customer
with personal attention and assistance while shopping. Even if an adequate
number of employees and sales staff is hired, monitoring all their activities at
all times is not feasible.

Difficult to Establish: Since they require very high financial commitment and
also a large retail space, opening a departmental store is quite difficult. There
are many barriers to entry and the losses in case of failure tend to be very
high.
Shopping Malls –

A shopping mall is a specially built covered area containing shops and
restaurants which people can walk between, and where cars are not allowed.

Shopping malls are not only places to shop; they also have become places for
having fun and spending time. Consumers spend a considerable time in
shopping malls because they host a lot of stores and activities that attract
consumers' attention and offer a lot of benefits.

A shopping mall is a place where people get many varieties and they also
watch movies and there is also a Game Zone available for kids .Today
shopping mall are getting more money compared to small shops and even in
shopping mall is there is food cafe available which provides food and in mall
there is also unique colours and expensive clothes.
Advantages-

1.Shopping malls have a large variety of products which can be found

under one single roof. It enables the shoppers to find their necessities
as well as their luxuries.

2.They provide various facilities to the people like the parking facility,

food courts and many more.

3.Some malls also have some recreational activities like bowling, movie

theaters and gaming zones.
Disadvantages-  

1.Sometimes the malls are really overcrowded.

2.Most of the products are overpriced due to the setting of the products.

3.Most people nowadays just come to click some pictures and roam around

the mall.
Specialty Stores-

specialty stores are retail businesses that focus on specific product

categories, such as office supplies, men's or women's clothing, or carpet.
It isn't the product they sell that determines if a company is a specialty
store, but rather the breadth of their product offering. If a company could
be considered an expert in a certain type of good, it is a specialty store.

A speciality store is one which focuses on one or two specific categories.

They have a very narrow product line. However, the advantage of a
speciality store is that you will find many things in that store related to
that speciality which you might not find on the open market.

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. Specialty stores concentrate in limited number of complementary
merchandise categories and provide a high level of service.
Specialty stores concentrate on a limited number of complementary merchandise categories and provide a high
level of service.

A specialty store is a business that focuses on selling a specific product or a narrow line of products. Specialty stores are
often retail businesses that focus on particular product categories. Retail stores sell small quantity of items for quick
consumption instead of selling for resale purposes later on. Specialty stores can also sell a wide variety of products but in a
specific category of goods. Specialty stores can be small retail shops, national chain stores, or locally owned stores.

Example of Specialty store – There are two examples of retail stores which can be considered as Specialty stores.
The first example includes stores which are specialized in bodybuilding or sports. Such stores will have all
different kind of fitness equipment’s and you can find equipment’s which you won’t find in the common market.
Thus, if you had to buy fitness equipment, you would probably visit the speciality store.

Another example includes the technical stores which are specialized. If you had to buy a water purifier, it is highly
likely you will go to an “expert” store which only sells water purifier and all different kinds of spare parts related
to water purifiers. Thus, because of their nature of being specialized, these retail stores are also considered as
speciality stores.
Advantages of Speciality stores –
1. Specialty stores have an advantage when it comes to staffing and training. Employees only need to
know or learn about one type of merchandise. For example, a sporting goods store can employ sales
staff with backgrounds in team sports and personal fitness. This provides an advantage over general
retailers, whose staff are less likely to know about all of the products available to customers.

2. One of the key benefits of a specialty store is its focus on a single class of products. This gives owners
and employees a chance to develop expertise and a reputation for knowledge and selection within the
store's defined specialty. A specialty store can carry more goods within its chosen category, drawing
enthusiasts who can't find what they want specifically at a general retailer. 
Disadvantages of speciality stores –

1. speciality stores lack variety. While they may sell many different specific products, they all fall into a
single category or classification. This means that shoppers are only likely to come to the store when
they have interest in the type of products it sells. This is a contrast to department stores, which can
draw customers in with one type of product and expose them to many other types of products while
they shop. 

2.Another drawback for a specialty store is its financial reliance on a single market. While department
stores can shift their inventories to accommodate changing trends in consumer buying, specialty stores
risk alienating customers if they alter their offerings too much. For example, a stationary store will see a
dip in sales if customers begin using online cards in place of mailed greeting cards. 
Non – Store Based Retailing –

Non-store retailing is a form of retailing in which a firm sells its products

without a physical retail store/space. The firm sells its products via online
platforms and delivers the product to customer’s doorstep.

With the changes in customer’s preferences, the non-store retailing business

has grown immensely during the 21st century. A lot of non-store retailing
brands have established themselves as trustable sellers. Therefore, more and
more people now prefer to shop without physically visiting the brick-and-
mortar stores.

Moreover, non-store retailing has now taken a significant share of the

retailing business. In fact, one of the world’s largest retailers, Amazon, is a
perfect example of non-store retailing. The company has massive warehouses
but no physical store. Customers buy the products online, and Amazon
delivers the products at the customer’s mentioned designation anywhere in
the world.
Any sale happening to the end customer which is not happening through a
traditional retail channel or through a physical retail space is known as Non-
store retailing. 

Types of Non-Store Retailing with Examples

Generally, non-store retailing is classified into six further types:

1.Direct selling
2.Telemarketing
3.Online retailing
4.Automatic vending
5.Direct marketing
6.Electronics retailing
The term used to describe retailing outside of a shop is called non store
retailing. Online websites such as Amazon, Flipkart, Snapdeal are the
examples of non store retailing.

Advantages:

1. Advantages of non store retailing are it is easy to access, a large range of

products are available and products can be bought at discounts.

2. Customer Intelligence - on-store retailing requires customers to submit

some necessary personal details to buy a product. This way, companies can
keep a record of their customers, can access them with promotional offers,
and evaluate customers’ needs in a better way.

3. Better and Easy Access to the Market-Non-store retailing has made it easier
for businesses to access the market. Amazon, started as simple online stores,
and now they are the leading retailers across the globe.
Disadvantages :

1.Customers’ Trust -One of the most challenging things for non-store retailers
is to attract customers and gain their trust. In fact, it can be more difficult for
those new entrants who don’t have any prior market reputation.

2. Advertising Costs-A non-store retailer may not need a physical store, but it
needs to advertise its products to get customers. Digital marketing can be
very expensive, and it mostly works via the pay-per-click method. 

3.Security and Legal Requirements-Websites and other digital channels are

always exposed to hacking.