Wholesaling And Retailing PDF

WHOLESALING AND RETAILING Compiled by: Mr. Zamora, Mr. Magallanes and Mr. Arligue Objectives At the end of the lecture, the students must be able to: 1. understand how wholesaling and retailing works; 2. identify the types of wholesaling and retailing; and 3. differentiate and com...

WHOLESALING AND RETAILING Compiled by: Mr. Zamora, Mr. Magallanes and Mr. Arligue Objectives At the end of the lecture, the students must be able to: 1. understand how wholesaling and retailing works; 2. identify the types of wholesaling and retailing; and 3. differentiate and compare wholesaling and retailing.  WHOLESALING  It includes all the activities involved in selling goods and services to those buying for resale or business use.  Firms engaged primarily in wholesaling activities are called “wholesalers” WHOLESALERS They buy mostly from producers and sell mostly to retailers, industrial consumers and other wholesalers. As a result, many of the nation’s largest and most important wholesaler are largely unknown to final consumers.  Characteristics of Wholesaler 1. Operate on large volumes but with chosen group of products Examples: food, grocery, pharma or auto parts, clothing, etc. 2. The company itself, contracted parties or free-lancers, can operate as wholesalers 3. Most B2B business– trade & institutions 4. Wholesaler could also be a retailer  Classifications of Wholesaling FULL SERVICE  The full-service type of wholesalers is, as Example: Samsung wants to the name suggests, giving full service to expand its operation in region A but it does not have a sales the end retailer. office in that region. So it  stocking, selling, offering credit, delivery appoints a distributor in region and business assistance A. This distributor is solely responsible for order picking,  (company distributors, wholesale delivery, training sales merchants) associates, promotions and everything for the Samsung brand. He is now a full-service wholesaler.  Classifications of Wholesaling Example: Company X wants to sell its LIMITED SERVICE products online but it knows that if it allows local distributors to sell online,  range of service is limited there will be a huge price war. As a result, Company X appoints an  A limited service wholesaler is someone exclusive online wholesaler. This who stocks the products of the company online wholesaler has only one job – and sells it in a limited channel. He does To purchase the product and stock it and sell it online. So whenever an not have a large turnover or does not order comes from Amazon or eBay, cover all channels of the company. this wholesaler gives the machine to Amazon or eBay. That’s his only job.  Classifications of Wholesaling MERCHANT WHOLESALERS  independent businesses which include distributors & jobbers, etc.  Merchant wholesalers are the ones who buy directly from the manufacturer, store the product and Example: A vegetable wholesaler buys then sell it to the customer. They might produce directly from the farm and sell in any channel and they are not stocks it at his own warehouse. He then restricted to selling to retail only or to sells these products to the local retail online only. outlets or even to end customers. He may also sell to restaurants. However, any loss of the produce due to spillage or any other reason is a cost to the merchant wholesalers.  Key tasks of Wholesalers  Selling and promoting. Wholesalers’ sales force help manufacturers reach many small customers at a low cost. The wholesalers have more contacts and is often more trusted by the buyer than the distant manufacturer.  Buying and assortment building. Wholesalers can select items and build assortments needed by their customers, thereby saving much work.  Key tasks of Wholesalers  Break bulking. Wholesalers save their customers money by buying in carload lots and breaking bulk.  Warehousing. Wholesalers hold inventories, thereby reducing the inventory costs and risks of suppliers and customers  Key tasks of Wholesalers  Transportation. Wholesalers can provide quicker delivery to buyers because they are closer to buyers than are producers.  Financing. Wholesalers finance their customers by giving credit, and they finance their suppliers by ordering early and paying bills on time.  Key tasks of Wholesalers  Risk bearing. Wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage and obsolescence.  Market information. Wholesalers give information to suppliers and customers about competitors, new products, and price developments.  Management service and advice. Wholesalers often help retailers train their sales clerks, improve store lay outs and displays, and set up accounting and inventory control systems.  RETAILING  Retailing. A set of business activities that adds value to the products and services sold to consumers for their personal or family use.  A retailer is a business that sells products and/or services to consumers for their personal or family use.  RETAILING Any business entity selling products and services to consumers is ‘retailing’. The goods may be sold in a shop, in person, by mail, on the internet, telephone or a vending machine. Retail also have life cycle– newer forms of retail come to replace the older ones– the corner grocer may change to a supermarket  RETAILING Includes all activities involved in selling or renting products or services to consumers for their home or personal consumption Retail stores are independent of the producers – not attached to any of them. CHARACTERISTICS OF RETAILING Privacy Targeted Individuals Response Key Customized Measurement Characteristics Offer of Direct Immediate Testing Marketing Orders Higher Continuous Response Relationship CLASSIFICATION OF RETAIL STORES Retail is usually classified by Types of Products: a. Food Products b. Soft Products - clothing, apparel, and other fabrics c. Hard Goods – (hard line retailers) - appliance, electronics, furniture, sporting goods, etc. CLASSIFICATIONS OF RETAIL FIRMS Traditional Retailer - (the grocer in your locality) believes in high margin as his volumes are limited Modern Retailer - Believes in large volumes at low margins. He also tries to control his costs but does not provide personalized services Types of Retailers 1. Food Retailer 2. General Merchandise Retailers 3. Non-store Retailers  FOOD RETAILERS  Conventional supermarket. A self-service food store.  Supercenters. Provides one-stop shopping experience, broader assortments of food and general merchandise at attractive prices.  Warehouse Clubs. Retailers that offer a limited and irregular assortment of food and general merchandise with little service at low process for ultimate consumers and small businesses.  Convenience Stores. Enable consumers to make purchases quickly. GENERAL MERCHANDISE RETAILERS  Department Stores. Retailers that carry a broad variety and deep assortment, offer customer service and organize stores in distinctly separate departments  Specialty Stores. Concentrate on limited number of complementary merchandise categories  Category Specialists. Big box discount stores that offer a narrow but deep assortment of merchandise  Off-Price Retailers. Also known as closeout retailers, offer an inconsistent assortment of brand name merchandise at low prices, GENERAL MERCHANDISE RETAILERS A special type of off-price retailer is the outlet store.  Outlet stores are off-price retailers owned by manufacturers or retailers. Those owned by manufacturers are also referred to as factory outlets.  Drug stores. Specialty stores that concentrate on health and personal grooming merchandise  Home improvement center. A category specialist that offering equipment and materials used by do-it-yourself and contractors to make home improvement  NON-STORE RETAILERS  Electronic Retailing. Retailers communicate with customers and offer products and service for sale over the internet  Catalog and Direct-Mail Retailers. Retail offering is communicated through a catalog; direct-mail retailers through letters and brochures.  Direct Selling. Interactive form of retailing which is conveyed through face-to-face discussions with salespeople.  Television Home Shopping. Television program demonstrates merchandise and place orders via telephone  Vending Machine Retailing. Merchandise or services are stored in a machine  SERVICE RETAILING firms that primarily sell services rather than merchandise, are a large and growing part of the retail industry. Difference between Services and Merchandise Retailers  Intangibility  Simultaneous Production and Consumption  Perishability  Inconsistency Major Classifications of Retail Ownership  Independent, single-store establishments  Corporate Retail chains  Franchisees  Wholesaling vs Retailing 1. Not too worried about location, ambiance or promotions– prefer to be in the main market 2. Deal with other businessman and not to consumers 3. Deal with a specific group of products only 4. Much larger trading area 5. Much larger transactions with suppliers and customers 6. Believe in low margins but high volumes Thank you for listening. ;)