Wholesaler refer to a firm engaged primarily in wholesailing activity, while wholesailing refers to all the activities involved in selling goods and services to those buying for resale/business use.
– Selling and promoting
– Buying and assortment( a group of similar things having different sizes, colour and quality) building
– Bulk-breaking
– Warehousing(storage).
-Price stability –This is possible mainly due to storage that happens .During low production seasons,stored goods are released in the market and stabilize supply in the market.
– Transportation
– Financing
– Risk bearing
– Market information(advice)due to contact with manufacturers
– Management services and advice
DIFFERENCES BETWEEN WHOLESALERS AND RETAILERS
WHOLE SALERS RETAILERS.
-Sells goods from his warehouse -Sells goods from shop.
-Can be located else where -Located at complicated centers to offer
what is supplied.
-need large capital base to start -need smaller capital to start.
-need large storage space -need smaller storage space.
-buys in bulk and stocks in large quantity -buys at smaller quantity and sells in
smaller units.
-sells on cash basis -sells in credit and cash.
-specialise in buying and selling few -buy and sell different commodities
types of commodities
FUNCTIONS OF MIDDLEMEN/INTERMEDIARIES
- Contacting function-this involves being link between the producer and the consumer.
- Market feed back(communication)-they relay information to consumers about the product and collect feedback from the customers to the manufactures.
- Breaking the bulk-this is in smaller quantities that customers can afford.
- Physical distribution-this is transportation of products from producer to the consumer.
- Demand stimulation function-through advertising, personal selling and sales promotion.
- Advancing credit to their clients
- Storage function-warehousing goods on behalf of the producers.
ROLE OF IT/E- COMMERCE IN DISTRIBUTION
E-commerce /It has improved distribution system and enhanced communication among members.it involves use of computers, mobile phones, internet, electronic payments e.g. Mpesa etc.
1.Use of mobile phones and emails helps channel members to communicate in fast manner on issues regarding distribution of products.
2.Helps in monitoring and branding movement of goods.
3.Use of EDI among channel members helps them to always to be in touch to each other.
4.Marketing may also be carried out by channel members through internet.
5.Use of computerized system in storage helps channel members to store their goods in modern way which is more effective.
6.Use of electronic payments among channel members helps to pick transaction and is also cheap compared to traditional methods e.g. ATMS,MPESA etc.
7.Use of modern ways of ordering goods e.g. making online orders and use of emails assists in saving costs and continuity in production processes.
8.Use of e-sourcing in locating suppliers.
Intensities of distribution involve determining the number of intermediaries that will be used at each level and includes:
- I) Intensive Distribution
This is the strategy whereby a product is distributed by as many outlets as possible. This is used for products, which the consumer requires a great deal of location convenience e.g cigarettes, Newspapers milk, bread, Scratch cards, soft drinks etc.
- II) Selective distribution
Manufacturers select only a few distributors for a new product and is especially. For speciality and shopping goods e.g. Appliance like fridge, cookers.
Advantage of selective Distribution
- a) It enables the produce to gain adequate market coverage
- b) Easy to control the channel
- c) Less costly compared to intensive distribution strategy.
III) Exclusive distribution
This is getting into an agreement with a particular middle man where the manufacturer gives exclusive rights to the marketer to distribute the product. This severely limits the numbers of intermediate or channel members. Used when the producer wants to maintain the control of the service levels. Also here, the middleman in return agrees not to carry any merchandise of the competition e.g. Bata, Simba Telecom (Safaricom Dealer),Marshall,-exclusive distributor of electronics and DT Dobie for Mercedes.
Advantages of exclusive distribution
- a) The rational behind this strategy is that the specialization in one line may greatly increase sales and profits particularly the premium price obtained through exclusive distribution
- b) Certain service level is maintained.
- c) Control by the manufacturer
- d) Standardized price
Disadvantages
- a) Requires greater partnership between the seller and re –sellers e.g. Bamburi.
- b) Training of channel members thus costly.
This are activities that support the physical distribution of goods and they include;
- Warehousing-this is performance of administrative and physical functions associated with storage of goods and materials the functions include receiving-identification-inspection-storage of goods for issue to production process-retrieving goods.
- Transportation-this is the movement of finished goods from production operation to consumer using various modes of transportation e.g. road, air ,water and rail.
- Order processing-this is the efficient receipt of orders, processing the orders, ensuringefficient delivering and preparation of invoices for payment.
- Stock/inventory control-this is maintaining of stocks in sufficient levels to avoid overstocking and running out of stocks before the next delivering.
- Clearing and forwarding-clearing and forwarding agents are service providers who assist importer/exporter to arrange for transport, documentation and customs clearance for international shipment.
