Wholesale: types, meaning and characteristics

Wholesalers purchase goods on a commercial basis and sell them to resellers (e.g. retailers), processing companies (e.g. craftsmen) or bulk consumers (e.g. hotels) without any changes.

Wholesale operations

Nach seiner Stellung in der Retail chain lassen sich folgende Betriebsarten unterscheiden:

Purchase wholesale - The wholesale trade buys harvest products and raw materials directly from producers in order to sell them on to manufacturing companies in particular. This type of wholesaling is primarily found in sectors in which the market is confusing or where it is not worthwhile for the manufacturer to be active in the market (e.g. leather, hops, wood).

Manufacturing link wholesale - The production wholesale trade usually connects two manufacturers. A special wholesaler for screws and dowels puts together a wide range from which craftsmen and small industrial companies can make use of without having to resort to the numerous sources of supply themselves.

Sales wholesale - The wholesale trade has the task of reselling the goods of the producers to resellers or bulk consumers. This operating mode plays an important role for retailers in the compilation of product ranges.

The following operating modes can be distinguished according to the breadth and depth of the range:
Assortment wholesale - Assortment wholesale is characterized by a broad and, depending on the size of the company, either a shallow or deep assortment. He is able to supply the retail trade in question comprehensively. A food wholesaler holds z. B. so many different articles ready to make both the appropriate food trade and the bulk consumers (z. B. hotels and restaurants) an appropriate range of goods.

Specialty wholesalers - The specialist wholesalers, on the other hand, have a narrow but very deep range. He specializes in a certain industry. Both industrial companies, craftsmen and retailers can choose from the range.

Depending on the method of delivery, the following types are distinguished:

Delivery wholesale - The distribution wholesaler takes orders from its customers by telephone or letter and picks the goods. The delivery is then usually free domicile with our own vehicle fleet.

Cash-and-Carry-business - The cash-and-carry operation is a form of self-service wholesaling, in which commercial customers select the goods themselves in the wholesaler's salesrooms, pay for them in cash and transport them away using their own means of transport.

Rack Wholesalers (Rack Jobber) - A special form of wholesaling is shelf wholesaling (rack jobber). Here there is a cooperation between retail and wholesale. Larger retail operations provide the wholesalers (or the manufacturer) with shelf space or sales rooms in their rooms, from which the retailer's customers can use. The wholesaler takes care of the delivery and stocking of the shelves with mostly problem-free articles on his own account.
The retailer provides the shelves and receives a sales commission. The depots (e.g. cosmetics, coffee) are typical of shelf wholesalers. This form of sale offers advantages to all involved. The retail trade can round off its range with the rack jobber's goods and earn additional income through the sales commission. The wholesaler secures sales opportunities by embedding his goods in a complete range.

Importance of wholesale

The importance of wholesaling can be seen when comparing the advantages that both retailers and manufacturers derive from this two-tier distribution system: The manufacturer experiences a simplification and thus relief of his sales organization.

Example: There are 10,000 retailers in an industry, 7,000 of which sell one manufacturer's products. Assuming that every retailer orders goods around 50 times a year, the manufacturer would have 350,000 sales contacts a year. The dispatch, the field service and the bookkeeping would have to be organized accordingly. However, if there were 100 wholesalers in this industry, his sales contacts would be reduced to 5,000 with 50 orders per year.

In addition, wholesalers protect the manufacturer against fluctuations in employment and reduce their storage risk.

Retailers, craftsmen and small industrial companies, especially those that are not affiliated with a purchasing association, use wholesalers to simplify their purchasing organization. You choose goods from a comprehensive range, receive a complete delivery, and the volume of documents is limited. In addition, they ensure fast delivery, e.g. B. in bookstores.

Example: A bookseller with an assortment of 40,000 different titles would have to do with several hundred publishers without a wholesaler. Apart from the delivery times, the organization and handling of the ordering system would present him with insurmountable difficulties. By focusing on two or three wholesalers, the volume of documents is reduced for him, and delivery times are shortened considerably thanks to daily deliveries.

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