Wholesale

Concept• Wholesale means to sell goods in relatively large

quantities.• The wholesalers buys goods and commodities in large

quantities for further selling them in small quantities to the retailers.

• According to Cundiff and Still “Wholesalers buy and sell merchandise to retailer and other merchants and to industrial, institutional and commercial users, but do not sell in significant amount to ultimate consumer

Characteristics

• Vital link between the manufacturer and the retailer.

• Buys in bulk quantities from the manufacture and resells them to the retailers in small quantities.

• Deals with limited no. of products.• Wholesaler operates in a specific area

Wholesaler-Producer Service

• It is possible for the producers to go for the large scale manufacturing

• It reduces administrative and financial burden of the producers by bearing above costs.

• Manufacturers can cover wide area with help of wholesaler.

• Provides Valuable information in the strategic planning by the producer.

• Helps in avoiding stocks out.

Wholesaler-retailer

• The gap between the producer’s offerings and retailers expectation is bridged by the wholesaler.

• Provide necessary supports to retailer.• Risk and investment at retailer level is

substantially reduced.• Helps retailer by providing P-O-P materials.

Wholesaler-Consumer

• Variety of products for consumer, is possible through support of wholesaler.

• Consumers are benefited with price stability.• Market information provided by wholesalers

helps consumer in decision making.

MAJOR WHOLESALING DECISIONS

1. Which Markets to operate in?2. Manpower3. Which Produce to Sell?4. Promotional Support5. Credit and Collections6. Image and Customer Perception7. Warehouse Locations and Design8. Inventory Control

Types of wholesaler

1. Merchant Wholesalers2. Brokers3. Manufacturers's Agents

Merchant Wholesalers• Merchant wholesalers are the most common type• They buy their wares directly from the manufacturer,

usually in huge lots, and then turn around and sell these products to various retailers around the country.

Two types of merchant wholesaler 1. Full service merchant wholesaler2. Limited-service merchant wholesaler

Brokers

• Brokers essentially act as middlemen between the manufacturer and the retailer, but they do not usually take possession of the goods, which sets them apart from more traditional wholesalers.

• Brokers act on a commission basis and work for clients in the manufacturing business.

Manufacturers's Agents

• Manufacturers's agents work directly for the manufacturer, in their sales office.

• run by the manufacturing company, but are almost always located separately from the manufacturing plant.

Functions of wholesaler• Buying of goods in large quantities from producers

and selling the same in small quantities to retailers is termed as wholesale trade and the person who carries on wholesale trade is called the "Wholesaler".

• He assembles varieties of goods from different producers and store in his godown

• He stores the assembled goods in proper warehouse till the goods are sold

• He distributes the assembled goods to the retailer or to the consumer directly. He thus helps in the dispersion process of marketing

Functions contd….

• He helps in the transportation of goods form the place of production to his godown and to the retailer.

• He provides financial assistance to the retailers by supplying products on credit

• He involves all the risks associated with the ownership as he makes bulk purchases and makes arrangement for assembling and warehousing

DISTRIBUTORS

Definition

A distributor is a whole seller nominated by a company to most times exclusively re- distribute the company products to all retailers and institutions is a designated territory.

Need for a distributor

A distributor may be required under three circumstances:a. For entering into a new town.b. For additional coverage in the same townc. For replacing an existing distributor.

Expectations from the distributors This is to be defined right at the beginning so that the prospective candidates can be advised and secondly to get the right kind of distributors. The expectations are:

achieving sales target in volume, value and brand packs.

Financial commitment for inventory and credit to be extended in the

market.

Investment in infrastructure- storage space, vehicles for distribution.

Man power for selling and handling the office records, and reports.

Developing new markets and new accounts.

Managing key accounts and institutional business.

Effectively handling promotions and schemes initiated by the company.

Managing damaged stocks.

Organizing and participating in promotional events.

Handling customer quality complaints.

New products and pack sizes launching- assisting the company

Merchandising and displaying in the market.

Effectively handling promotions and schemes initiated by the company.

Managing damaged stocks.

Selection of distributorsDistributors selection involves some of these steps.Based on company requirements, identifying two or three prospects for each appointment necessary.Background check on each short listed candidates.Meeting the prospects, explaining to them what is required and finding out their interest level.After getting all this information, the salespeople have to be shortlisted one or two final candidates with whom the dialogue can continue.Final selection could be made on qualitative and quantitative factors like, willingsness/eagerness, confidence etc.

Security deposits

Most companies take deposits from the distributors before appointing him.

The security deposit has to be paid as a demand draft and not as a bank guarantee.

The security deposit is to protect company against any payment defaults by the distributors.

Payment by the distributorsThe distributor is required to keep about 10 pre signed blank

cheques with the company.

On every dispatch of goods to the depositor, the value of the goods is immediately entered in one of the cheque and deposit into the bank account of the company.

Investment in inventoryThe distributor is required to maintain a certain level of the

company goods in inventory

The level of inventory is about two weeks of saleable physical stocks.

The salespeople should monitor this inventory holding and not let it go down for any reason

Investment in infrastructureThe distributor has to invest in a storage space with a capacity

for at least one month of average sales, man-power for selling and collection and keeping the accounts etc.

All the infrastructure is to be built up at the start of the operation and not on installment.

Manpower The distributor should also have adequate number of salespeople to cover the market as per the agreed plan.

these salesmen are in the payroll of the distributor but selected by the company along with the distributors.

Coverage of marketThe territory of the distributor is defined by the company along with the distributor.Once the territory is defined, the number of outlets to be covered in the territory would be known.The beat plan decides the day, frequency and the market to be visited and the number of outlets to be covered each day.The distributor is required to cover attached market/village and this will be specified while assigning the territory to the distributor.

DEVELOPING RURAL MARKETS•The distributor is expected to develop all interior markets within about 20-25 kms of radius of his location.

•Some of these markets may not initially be on the beat plan of the distributor, but as his business stabilizes & his sales people are able to work the markets better, he would start looking at these additional markets within the time allotted by him for his territory coverage.•HLL used operation “Harvest” to seed rural market.

Determinants for developing rural marketing

1. Outlet coverage Important tasks to be performed:• Width of distribution• The depth of the distribution• Merchandising FIFO(first in first out) should be followed

2. New Accounts• In every market, new outlets keep getting

opened regularly.• The distributor salesmen have to keep track

of these & automatically cover them without being prompted by the company salespeople every time.

• If the number of outlets is more, or a big super market comes in, there may be a revision required in the beat plan itself which the company sales people can be requested to take care of.

3. Secondary sales effort & tracking• A secondary sale is the sale that the

distributor makes to his customer- both retailer & institutions with or without the direct involvement of the company sales personnel

• It gives the right measurement of how well the company products are accepted in the market & determine the market share of the products & is critical to be measured regularly.

• The distributor will buy more only if the 2ndry sales happen regularly.

4. Competition tracking• The distributor is in the best position to inform

the company about all the current & proposed activities of the competitors in the market place.

5. Handling product promotions• Display schemes• Free offers or discounts on some products• Sales contest• Trade promotion

6. Managing damaged goods• Distributors may take back the damaged

stocks from influential retailers .• All damaged stocks are a cost to the company

& have to carefully handled by the distributors to reduce losses.

• The distributors will either destroy or dispose off at reduced prices all such stocks after getting the permission of the sales person of the company.

7. Attending to consumer complaint• Retailer is the first point of contact for

consumer complaint• Written complaint required• Along with name, address & the reason8. Organizing & participating the promotional

events• Trade fairs ,melas• Home-to-home selling campaigns• Special merchandising efforts• Promotional sales in chosen retail counters

Motivational Tools For Distributors• Regular visits of the company• Secondary sales target achieving –incentives• Quantity purchase discounts• Sales contests• Extending credit• Inviting in important company meetings• Organizing parties• Sales contests for distributor salesman

Performance Evaluation Of The Distributors

• To be conducted in every 6 months• Parameters of evaluation should be known to all the

distributors• Some parameters are:- Secondary sales- Handling promos & events- Stock levels- Handling market complaints- Feedback from retailers- Timely submission of reports- Effort on new products/packs