WHOLESALERS VALUE ADDITION IN THE DISTRIBUTION CHANNEL 5
WholesalersValue Addition in the Distribution Channel
Wholesalingis the sale of goods to manufacturers, retailers, or other businessventures. It involves the sale of products to any one part of thetraditional final consumer. It also uses less traditional marketinglike television advertisements and maintaining personal relationshipswith buyers and sellers. In addition, it involves larger orders tosell to fewer customers compared to a traditional retail business(Boone, 2012).
Accordingto the American Marketing Association (2015), wholesaling increasesthe value of goods to generate sales efficiency similar to otherenterprises. Although many firms may claim to be saving theconsumer`s money through direct selling and eliminating themiddlemen, this is in most cases a doubtful claim. The brokers canperform certain tasks such as efficient delivery, better than themanufacturer. Further, for some items such as pens intermediariesmake it easier for the consumer to purchase one pen at a time fromthe nearby shop rather than having to order directly from the factory(Boone,2012).
Firstwholesalers assist in breaking bulk. They buy in large-scale from themanufacturers and sell in small quantities to the consumer. Theyenable the consumer to purchase small quantities of a product at atime. Wholesalers reduce the number of discrepancies in therelationship between supply and demand, as well as the consumers andthe manufacturers through breaking the bulk (American MarketingAssociation, 2015).
Secondis consolidation and distribution. They consolidate a large number ofproducts from various manufacturers so that a large number ofproducts from different manufacturers can be received in oneshipment. Further, wholesalers enable retailers such as supermarketsand malls to combine products from various manufacturers. They allowthe customer to buy a variety of products in one stop rather than tovisit various shops to buy each item. In addition, consolidationreduces costs and increases the efficiency with which goods aredelivered and received in one shipment. It also reduces theassortment discrepancy between the factory, consumers and retailers.However, this applies to small retailers since huge retailers can beable to handle distribution more efficiently (American MarketingAssociation, 2015).
Thirdis the benefit of carrying inventory. Since wholesalers buy in bulk,they reduce the temporary discrepancy between manufacturers. They mayhave the need to schedule production at constant levels. Further,consumers may also demand certain products at given times.Manufacturers hence serve as a room for manufacturers to keep theirinventory to release their warehouses for further production (Kotler,1991).
Fourthis financing. Wholesaling adds value by financing manufacturers.Small manufacturers may have a problem waiting for goods to bedelivered to the customers and further waiting for them to pay.Wholesalers can negotiate a lower price with the manufacturer forquick payment. The manufacturer’s activities are not held captiveby the non-availability of finances (Beckman, 1959).
Fifthis promotion. Wholesalers aid in the promotion of the goods theysell. The services may be at a fee or even free sometimes. Theprimary rule is that the price tag is not high because the wholesalercan spread the cost of the sales building program over a number ofretailers (Boone,2012).
.Sixthis stock control. In some line of goods, the manufacturer is able toprovide stock control for retailers through minimum attention oftheir workers. The workers ensure that the retailers do not run outof products. They assist retailers to maintain the stock levels theyneed to supply to their consumers (Kotler, 1991).
Thefinal step is enabling new developments. Wholesalers assist in thecreation of new products by providing information to manufacturers.They facilitate generation of ideas by collecting information relatedto current trends among the customers from retailers and submit tothe manufacturer (Kotler, 1991).
Kotler,P., & Armstrong, G. (1991). Principlesof marketing (5thed.). Englewood Cliffs, N.J.: Prentice Hall.
AmericanMarketing Association, (2015).Retrieved March 6, 2015,fromhttp://www.Marketing power.com
Boone,L. (2012). Contemporarymarketing, 2013 update.S.l.: Cengage learning custom p.
Beckman,T. (1959). Wholesaling (3ded.). New York: Ronald Press.