Topic WHOLESALING AND RETAILING

Submitted to: Mr. Rohit Bansal (Astt. Prof.MBA deptt.)

Submitted by: RAHUL MIGLANI Roll no- 39

Vaish College of Engineering (Rohtak)

Contents
Introduction of wholesaling and retailing Wholesaling Kinds of wholesaler The challenging landscope of wholesaling Trends in wholesaling profitability Functions Retailing Challenges facing Indian retail industry Functions Trends Distinguish b/w wholesaling and retailing Reference 1 2 3-4 5 5-6 6-9 10-12 12 13-14 15-18 18 19

Wholesaling and Retailing Introduction

Wholesaling jobbing, or distributing, is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services. [1] In general, it is the sale of goods to anyone other than a standard consumer. Further In the banking industry "wholesale" usually refers to wholesale banking, providing tailored services to large customers, in contrast with retail banking, providing standardized services to large numbers of smaller customers. Often wholesellers are not required to charge their buyers sales tax, though sometimes they may be required to (or may per discretion) charge a special wholesale tax

Retail consists of the sale of goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Further In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power. Retail establishments are often called shops or stores like

self-service store
Further they can be store retaiers,nonstore retailers and retail organisation

. WHOLESALER are successful only if they are able to serve the needs of their customers, who may be retailers or other wholesalers. Some of the marketing features of wholesalers to their buyers include:

Provide producer's goods in an appropriate quantity for resale by buyers. Provide wider geographical access and diversity in obtaining goods. Ensure and maintain a quality dimension with the goods that are being obtained and resold. Provide cost-effectiveness by reducing the number of producer contacts needed. Provide ready access to a supply of goods. Assemble and arrange goods of a compatible nature from a number of producers for resale. Minimize buyer transportation costs by buying goods in larger quantities and distributing them in smaller amounts for resale. Work with producers to understand and appreciate consumerism in their production process.

Kinds of wholesaler

a) merchant / pure wholesaler

Merchant wholesalers are firms engaged primarily in buying, taking title to, storing, and physically handling products in relatively large quantities and reselling the products in smaller quantities to retailers; industrial, commercial, or institutional concerns; and other wholesalers. These types of wholesaling agents are known by several different names, including wholesaler, jobber, pure wholesaler , distributor, industrial distributor, supply house, assembler, importer, and exporter, depending on their services. According to E. Jerome McCarthy and William D. Perreault Jr., authors of Basic Marketing, Merchant wholesalers also differin how many of thwholesaling functions they provide. There are two basic kinds of merchant wholesalers: 1) service (sometimes calledfull-service wholesalers) and 2) limited-function or limited-service wholesalers." The latter category of wholesalers, whichitself is divided up into little niches, offer varying levels of service in such areas as product delivery, credit bestowal, inventory storage, provision of market or advisory information, and sales

b) agents , retailers ,brokers , and commisionmerchant wholesaler

Agents, brokers, and commission merchants are also independent middlemen who do not (for the most part) take title to the goods in which they deal, but instead are actively involved in negotiating and other functions of buying and selling while acting on behalf of their clients (commission merchants typically are limited to agricultural goods). They are usually compensated in the form of commissions on sales or purchases. Agents, brokers, and commission merchants usually represent the non-competing products of a number of manufacturers to several retailers. This category of wholesaler is particularly popular with producers with limited capital who can not afford to maintain their own sales forces.

c) manufactres sales branches and office

Manufacturers' sales branches and offices are owned and operated by manufacturers but are physically separated from manufacturing plants. They are used primarily for the purpose of distributing the manufacturers' own products at the wholesale level. Some

have warehousing facilities where inventories are maintained, while others are merely 3 sales offices. Some of them also wholesale allied and supplementary products purchased from other manufacturers

d) specialty wholesaler
These are service wholesalers who carry a very narrow range of products and offer more information and service than other service wholesalers. A consumer products specialty wholesaler might carry only health foods or oriental foods instead of a full line of groceries. Or a specialty wholesaler might carry only automotive items and sell exclusively to mass-merchandisers. Specialty wholesalers often know a great deal about the final target markets in their channel. For example, Advanced Marketing is the leading wholesale supplier of books to membership warehouse clubs. The company offers hardcover best sellers, popular paperbacks, basic reference books, cookbooks, and travel books. Consumers in different geographic areas are interested in different kinds of books and that affects what books will sell in a particular store.

e) cash and carry wholesaler.

These wholesalers operate like service wholesalers except that the customer must pay cash. Some retailers, such as small auto repair shops, are too small to be served profitably by a service wholesaler. So service wholesalers set a minimum charge or just refuse to grant credit to a small business that may have trouble paying its bills. Or the wholesaler may set up a cash-and-carry department to supply the small retailer for cash on the counter. The wholesaler can operate at lower cost because the retailers take over many wholesaling functions. And using cash-and-carry outlets may enable the small retailer to stay in business. These cash-and-carry operators are especially common in lessdeveloped nations where very small retailers handle the bulk of retail transactions.Truck wholesalers. These wholesalers specialize in delivering products that they stock in their own trucks. By handling perishable products in general demand tobacco, candy, potato chips, and salad dressings truck wholesalers may provide almost the same functions as full-service wholesalers. Their big advantage is that they deliver perishable products that regular wholesalers prefer not to carry. Some truck wholesalers operate 24 hours a day, every day and deliver an order within hours. A 7-Eleven store that runs out of potato chips on a busy Friday night doesnt want to be out of stock all weekend!Mail-order wholesalers. These wholesalers sell out of catalogs that may be distributed widely to smaller industrial customers or retailers who might not be called on by other middlemen. These wholesalers operate in the hardware, jewelry, sporting goods, and general merchandise lines. For example, Inmac uses a catalog to sell a complete line of 3,000 different computer accessories and supplies. Inmacs catalogs are printed in six languages and distributed to business customers in the United States, Canada, the United Kingdom, Germany, Sweden, the Netherlands, and France. Many of these customers especially those in smaller towns dont have a local wholesaler. 4

The challenging landscope of wholesaling

The future of wholesaling appears somewhat ambiguous. One major force affecting wholesaler activity is growth in the power of retail chain stores. The continued mergers and acquisitions taking place between similar regional chains since 1970 means that independent retailers will have a lesser need for wholesalers. The emergence of the Internet as a sales tool has also impacted wholesalers, many of whom are struggling to adopt profitable methodologies that make use of this new medium. Another negative factor has been an increased emphasis, on the part of both manufacturers and end users, on cutting distribution costs. However, there is a countervailing force at work in that retailing is becoming increasingly fragmented as more and more specialized retailers cater to specialized market niches. As this specialization continues, using wholesalers becomes the most cost-efficient way for manufacturers to cover fragmented retailer market segments. The wholesaler is able to bundle several manufacturers' items into combinations that can all be sold through the specialist outlet. In most cases, wholesalers will capitalize on market opportunities among specialized, independent retailers while they lose ground to chains buying directly from manufacturers. Many wholesalers have adapted nicely by becoming efficient importers, upgrading their operations with computers, improving inventory handling, and automating their warehouses.

TRENDS IN WHOLESALING PROFITABILTY

Wholesale trends are one of the most important pieces of news that eBay sellers should be monitoring. Wholesale trends are the changes in demand for products being sold in the marketplace. These trends also include the introduction and demand for new wholesale products into the marketplace eBay sellers of all types need to monitor these changing wholesale trends. By seeing what is becoming popular and what is losing in popularity, eBay sellers will be able to know what products they should be buying and selling Here are three great methods for monitoring wholesale trends. Remember that you want to be able to anticipate product demand before your fellow eBay sellers do. This is especially important if you want to be selling on eBay popular products before other eBay sellers start catching on.

Wholesale Trend Monitoring Tip #1

Movies. When a new movie is released you can expect a great deal of marketing to be involved. By the time the movie hits the screens you can expect thousands of enthusiastic fans to be familiar with the movie. You can expect that products related to the movie will be strong sellers on eBay.

Wholesale Trend Monitoring Tip #2

Magazines. Popular culture magazines are the first ones to showcase a new product hitting the marketplace. Often they will cover the development of a product that they predict will be very popular. And sometimes the magazines themselves create demand for a product by publishing a glowing review of the prod

FUNCTIONS
Collection of goods:
Collection of goods is the very first work of wholesaler. He collects huge quantity of goods at wholesale from the producer. The function of purchasing goods is very much important to the wholesaler. His amount of profit largely depends on his purchasing capacity.

2. Warehousing:
Another important function of a wholesaler is to store and retain large quantities of goods which reduce the cost to the manufacturer. The wholesaler adds on a margin for this facility and this margin becomes part of the cost to the retailer. Wholesaler markets his goods according to their demand.

3. Marketing:
Thirdly, the wholesaler divides the collected goods into small lots and supplies them to retailers. The wholesaler is able to assist the manufacturer as well as the retailer by breaking down the goods from large portions to smaller, saleable quantities. The wholesaler has to do some more works other than collecting, storing and marketing of goods.

4. Transportation:
Wholesalers can provide quicker delivery to buyers because they are closer than the producers. The wholesaler is often able to transport the goods to retailers which is an important advantage to the smaller retail firms. Retailers can then attend to the warehouse and buy as required.

5. Standardization, gradation and packaging:

After standardizing the collected goods received from the producer the wholesaler grades the goods according to standard and then supply them to the retailers. Besides before sending of goods to the retailers, there is the necessity of proper packing. Now-a-days separate expert business organizations are found in standardization and packaging of goods .

6. Promotion:
Wholesalers salesforces help manufacturers reach many small customers at a low cost. The wholesaler has more contacts and is often more trusted by the buyer than the distant manufacturer. The wholesaler is able to market the product to the retailer on behalf of the manufacturer. This involves a promotion that is calculated to inform retailers of products that they hold available for sale.

7. Risk bearing:
The wholesaler buys finished goods from the producer and keeps them in the warehouses till they are sold. Therefore, he assumes the risks arising out of changes in demand, rise in price, spoilage or destruction of goods. Wholesalers also absorb credit risk by allowing retailers to buy on credit .

8. Market information
Wholesalers give information to suppliers and customers about competitors, new products, and price developments. The wholesaler is in a position to give

feedback to the manufacturer on the success or otherwise of the goods that have been supplied to the retailer for consumers.

9. Variety:
Because a wholesaler can stock a lot of different types of goods from a number of manufacturers, the retailer is able to call into the warehouse and purchase from a larger selection.

10. Buys in Bulk & Breaks Bulk:

They are able to buy from the manufacturer in bulk and not only store, but break down the bulk into small portions which can be sold to the retailer before it goes on the market. This facility of being able to sell smaller quantities to a larger retailer is an important function of being a wholesaler.

11. Price Fixation:

The final prices to be charged to customers are set by the wholesalers. In this way a wholesaler tries to prevent a fluctuation in prices.

12. Financing:
The wholesaler provides financial support to producers and manufacturers by sending money in advance to them. He also sells goods to the retailer on credit. Thus, at both ends the wholesaler acts as a financier.

retailing

The retail

business offers products to consumers through a variety of venues. You can purchase just about anything you need in a mall, grocery store, discount warehouse or online. Some retailers sell exclusively through catalogs, and a few still sell products door to door. There are many different types of retailers offering goods and services both online and in your neighborhood

1) Retail Sales Agent

A retail sales agent discusses products with customers, helps customers with purchasing decisions and maintains copies of customer transactions. According to a June 2010 Michigan Jobs and Portal report, retail sales agent specialties include household appliance and sewing machine sales persons. Employers hire candidates with a high school or general equivalency diploma for sales training programs or hire individuals with an associate's degree in business operations. A June 2010 Simply Hired reports shows a retail sales agent earns an average annual income of $22,000.

2) Merchandising Team Associate

A merchandising team associate greets customers, cleans store stock rooms and assists retail buyers or merchandising managers. Some team associates compile and process merchandise returns to retail vendors or store suppliers. Candidates 10 high school or general equivalency diploma receive on-the-job training or candidates have prior retail experience. Employers look for candidates with customer service skills and a willingness to work non-traditional hours, such as weekends. Salaries vary greatly based on seniority.

3)Loss Prevention Retail Manager

A loss prevention retail manager helps stores to reduce financial losses. Types of losses involve arson, shoplifting, employee theft or sabotage of company property. The manager develops loss prevention policies, tracks reported losses and calculates the amounts for legal reports. Some retail employers hire candidates with a criminal justice bachelor's degree. This degree provides information on conducting legal investigations and working with law enforcement. A June 2010 Career Builder Salary report shows a loss prevention retail manager earns an average annual salary of $76,173.

4) Divisional Merchandise Manager

A division merchandise manager assists retail organizations with sales, inventory and marketing goals. The merchandise manager researches retail competitors, prepares written merchandise stock guidelines and evaluates employee performance. Retail employers hire candidates with business management, retail management or marketing degrees. These professionals require financial, communication and motivational skills. Candidates must travel to different store locations and accept working non-traditional hours, including evenings. According to a June 2010 report on Career Builder Salary, a divisional merchandise manager earns an average annual salary of $86,052

Further these are.

High-service retailers.
They are those retailers who provide a large or selective choice of merchandise with the elements of service, location and other kinds of attractive features which othe rregular retailers don't offer to their customers.

Price Focus retailers.

These retailers have their main focus on low prices, which is a point of immense attraction for most customers.

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Convenience retailers.
These retailers neither focus on services nor on low prices. In lieu they offer convenience to their customers in terms of location and accessibility.

The last class of retailers are One-stop-shopping retailers.

They are all-rounders in the retailing business and provide all of the abovementioned features to their customers along with an offering of eclectic range of merchandise . The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually.

Challenges facing Indian retail industry

a) The tax structure in India favors small retail business b) Lack of adequate infrastructure facilities c) High cost of real estate d) Dissimilarity in consumer groups e) Restrictions in Foreign Direct Investment f) Shortage of retail study options

g) Shortage of trained manpower h) Low retail management skill 12

Functions
.

Sorting
Manufacturers usually make one or a variety of products and would like to sell their entire inventory to a few buyers to redu7ce costs. Final consumers, in contrast, prefer a large variety of goods and services to choose from and usually buy them in small quantities. Retailers are able to balance the demands of both sides, by collection an assortment of goods from different sources, buying them in sufficiently large quantities and selling them to consumers in small units. The above process is referred to as the sorting process. Through this process, retailers undertake activities and perform functions that add to the value of the products and services sold to the consumer. Supermarkets in the US offer, on and average, 15,000 different items from 500 companies. Customers are able to choose from a wide range of designs, sizes and brands from just one location. If each manufacturer had a separate store for its own products, customers would have to visit several stores to complete their shopping. While all retailers offer an assortment, they specialize in types of assortment offered and the market to which the offering is made. Westside provides clothing and accessories, while a chain like Nilgiris specializes in food and bakery items. Shoppers Stop targets the elite urban class, while Pantaloons is targeted at the middle class. .Holding

Stock

Retailers also offer the service of holding stock for the manufacturers. Retailers maintain an inventory that allows for instant availability of the product to the consumers. It helps to keep prices stable and enables the manufacturer to regulate production. Consumers can keep a small stock of products at home as they know that this can be replenished by the retailer and can save on inventory carrying costs.

Channel of Communication
Retailers also act as the channel of communication and information between the wholesalers or suppliers and the consumers. From advertisements, salespeople and display, shoppers learn about the characteristics and features of a product or services offered. Manufacturers, in their turn, learn of sales forecasts, delivery delays, and

customer complaints. The manufacturer can then modify defective or unsatisfactory merchandise and services. 1 3

Transport and Advertising Functions

Small manufacturers can use retailers to provide assistance with transport, storage, advertising and pre-payment of merchandise. This also works the other way round in case the number of retailers is small. The number of functions performed by a particular retailer has a direct relation to the percentage and volume of sales needed to cover both their costs and profits.

Breaking Bulk
Breaking bulk is another function performed by retailing. The word retailing is derived from the French word retailer, meaning to cut a piece off. To reduce transportation costs, manufacturers and wholesalers typically ship large cartons of the product, which are then tailored by the retailers into smaller quantities to meet individual consumption needs

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Trends
Retail industry is continuously going through changes on account of liberalization, globalization and consumer preferences. While multinational retail chains are looking for new markets, manufacturers are identifying, redefining, or evolving new retail formats. The existing retail houses are also gearing up to face the emerging competition from the organized sector and the changing outlook of the consumers. For example, consumer spending is shifting from goods to services. Accordingly the retailers too are fast adjusting to the changing consumer preferences.

Consumers are not only looking for the core products or functional benefits from the retailers but also the non-functional benefits, which need to be compatible with their lifestyles. For example, most of the traditional eating joints in India such as Haldiram, Bikaner and Sagar Ratna have revised their product offerings and atmospherics on the lines of the multinational chains to compete with them and to serve changed expectations of the consumers.

Mom-and-pop Stores and Traditional Kirana Stores

The retail sector is changing as new store categories have started dominating the marketplace. Mass merchandisers (Wal-Mart, Big Bazaar), discount clubs (Subhiksha), so-called category killers (Home Depot, Vishal chain), and speciality retailers (Time Zone, Tanishq) have all developed a successful retail models. At the same time, the small mom-and-pop stores and the traditional department stores, are finding the competition intense. In 2002, while Wal-Mart and Target saw revenues grow (by 12% and 10%, respectively), department stores such as Saks and Federated experienced declining revenues (down 3% and 1% respectively). But even in the mass-merchandising segment, the competition is fierce, as is evidenced by Kmarts bankruptcy announcement in 2002. Small independent stores, across product categories, is a very common retail formats they are also undertaking large scale renovations to appeal and attract their target consumer segments.

E-commerce
The amount of retail business being conducted on the Internet is growing every year. Indeed, Forrester Research Agency projects e-commerce revenue to rise to $123 billion in 2004, an increase of some 28% over the previous year and for e-tailing to comprise a bigger slice of the overall retail pie (5.6%, up from 4.5% in 2003). Many major retail organizations and manufacturers have online retail stores. Companies like Amazon.com and First and second.com, which helped pioneer the retail e-commerce concept, are 15 being followed by bricks-and-mortar and catalogue retailers like J. Crew, which are expanding retail e-commerce into new markets.

Department Stores
A few years ago, names like Sears, J.C. Penney, Macys, and Montgomery Ward dominated malls and downtowns all over America. Over the last decade or so, however, these department stores have suffered badly. In part, this is a result of changing shopping patterns and increased competition from discount stores. It has also come from financial burdens incurred by companies that acquired competing companies and grew too fast. It is unlikely that these players will disappear from the market. However, they should be ready to expect more bumps as the strong get stronger and the weak get absorbed

Discount Stores
These are giants such as Wal-Mart (the largest retailer in the world, with more than a million; employees), Target and Kmart, as well as membership warehouses, such as Costco. These, along with the category killers, have changed the landscape of both the retail industry and America. Where once mom-and-pop and department stores dominated retail, now the discount retailers and category killers are at the top of the heap. And where once shopping malls, anchored by at least one major department store; used to be the dominant retail presence lining the nations roads, now it is the behemoth Wal-Marts and Home Depots.

Category Killers
These are the giant retailers that dominate one area of merchandise (e.g., Office Depot, Tower Records and The Sports Authority). They are able to buy bathroom tiles, file cabinets, electronic goods or pet food in such huge volumes that they can then sell them at prices even fairly large competitors cannot match. The future of this category is better than that of many of the more general discounters, but the same employment caveats apply. For most job seekers, these companies offer earn-and-learn experiences with vendors and distributors before they move onward and upward.

Specialty Stores
These include Crate & Barrel, the Body Shop, and Victorias Secret. These stores concentrate on one type of merchandise and offer it in a manner that makes it special. Some are very high-end (Louis Vuitton) while others cater to the price-conscious masses (Old Navy). Many are so successful that department stores have started to emulate their buying, marketing, and merchandise display strategies. Industry experts predict growth in this segment, particularly in home furnishings and home improvement, and it seems to attract many of the best and brightest in retail. Promotion and responsibility come quickly to those willing to work hard, and in many of these stores the hand of bureaucracy is not heavy.

E-tailers
While most retailers have online storefronts, strictly online purveyors with no bricksandmortar counterparts are hoping to snare a percentage of the retail profit. Major players, such as Amazon.com, have generated enough business to cause top brick-and mortar competitors to come up with their own Internet sites. Traditional retailers like Wal-Mart and Starbucks, hugely successful in their own right, have also set up online stores so as not to miss out on the revenue opportunities that the Interned offers

DISTINGUISH B/W WHIOLESALER

AND RETAILER

1)

Wholesalers buy in bulk and sell in bulk. Unlike retailers 2) Wholesalers do not usually sell to the end-consumer unlike retailers. They (wholesalers) sell to institutional customers (including retailers), while the retailers usually sell their stuff to the end-customer, like you and me . 3) Wholesalers are the intermediaries in the value-chain between the manufacturer and the customer. Unlike the retailers which are the last link before the product/service reaches the end-user. 4) The buying price and selling price of goods at the stage of a wholesaler is significantly lesser to the price points at that of a retailer.

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REFERENCE
2 ,3) http://www.referenceforbusiness.com/small/Sm-Z/Wholesaling.html 4) http://bizcovering.com/marketing-and-advertising/the-ten-types-ofwholesalers-understanding-their-functions-strategies-and-the-role-theyplay-in-the-distribution-system/ 5)http://www.homebusinessresearch.com/archive/wholesale_trends_how_eb ay_sellers_can_profit_from_them.html 6 , 7) http://gl-es.facebook.com/topic.php?uid=44903035795&topic=10313 8 , 9 ) http://www.ehow.com/list_6691720_types-jobs-retail.html ,

10 ,11) http://business.mapsofindia.com/india-retail-industry/ 12 ,13) http://www.mbaknol.com/retail-management/functions-of-retailing/ 13, 14, 15 ) http://www.mbaknol.com/retail-management/trends-in-retailformats/

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