CHAPTER 10RETAILING AND WHOLESALING

Retailing and Wholesaling

Definition of Retailing

Functions of Retailers

Definition of Wholesaling

Functions of the Wholesalers

Types of Wholesalers

What is Retailing?

Retailing refers to the business activity of selling goods or services to the final consumer.

A retailer is one whose business firm sells mainly to the final consumer. A retailer in some cases sell on nonretail basis like wholesale.

Functions of RETAILERS

1. They provide convenience;

2. They provide guarantee and service;

3. They provide financing of transactions;

4. They perform promotional activities.

5. They storage function;

6. They perform intelligence service for the manufacturer; and

7. They serve as buying agent consumers.

CONVENIENCE

Most retailers are located very near to the ultimate consumers. This spares the consumer from having to travel very far to find a retailer selling the required product services.

Retailers operate at hours most convenient to the consumers. Most sari-sari stores open from 6:00 AM to 9:00 PM. Gasoline stands on the retail operations on a 24 hour basis, seven days a week.

GUARANTEE AND SERVICE

Manufacturers and wholesalers sometimes sell directly to consumers. Most often, they are not in a position to satisfy immediate requests for service and product guarantees.

This is not so with the retailers. With accessibility, the retailer can immediate replace a defective product, or perform services like installing the purchased item.

FINANCING

A great number of retailing institutions provide financing by selling on credit terms. Some retail stores collect from customers on a monthly billing basis. This functions relieves the manufacturer from having to tie up his limited funds in activities like retail financing.

PROMOTION

Retailers perform promotional activities to stimulate sales. The effective display of products, for instance, increases the chance of making sales.

STORAGE

With the service provided by the retailers, the consumers are relieved from buying product which are not yet needed. Without the retailers the consumers will be forced to buy in advance from manufactures. This action will force the consumers to store the product. If customers are not willing to assume the storage function, the manufacturer will have to absorb it or forego production altogether.

INTELLIGENCE

The manufacturers, most often, do not have the facility to monitor information from individual consumers. Since the retailers are directly in touch with the consumers, the retailers are in a better position to gather information which could be relayed later to the manufacturers. This, in effect, makes the retailers intelligence agents of the manufacturers.

BUYING AGENTS

Many consumers have limited shopping time especially if it means selecting from among thousands of products coming out of the factories. The retailers who have the time, the skill, and the bargaining power, perform task of selecting the products and making them available for purchase by the consumers in more convenient locations like the stores. This, in effect makes the retailers perform the role of buying agents of the consumers.

TYPES OF RETAILERS

Retailers may be classified according to the following:

1. By sales volume

2. By product mix

3. By form of ownership

4. By method of operation

SALES VOLUME

According to the Sales Volume Retail stores may be classified as

1. Small:

2. Medium:

3. Large

This classification does not include the micro enterprises operating all over the Philippines

PRODUCT MIX OFFERED

Retailers may also be classified based on the product lines they carry. They may be categorized into:

1. General merchandise stores

2. Specialty sores

FORM OF OWNERSHIP

Retail stores operate under any of the various forms of ownership. They may either be:

1. Corporate chain stores.

2. Independent stores

3. Franchise stores.

METHOD OF OPERATIONS

Retailers also vary according to their method of operation. They may either be

1. Full service retailers

2. Supermarkets

3. Discount stores

4. Nonstore retailers

Home retailers

Telephone retailers

Vending machine retailers

Mail order retailers

Internet retailers

Cell phone service retailers

What is Wholesaling?

Wholesaling refers to all activities involved in selling goods and services to those who intend to resell or use the same for producing goods or services.

The wholesaler is the one who perform wholesaling activities.

The wholesale may be called as such depending on the intention of the buyer. The following transactions are considered wholesale:

1. The sale of a computer unit for office use

2. The sale of sugars as raw materials for candies

3. the sale of an electric guitar to a professional guitarist

4. The sale of janitorial services to a office

5. The sale of a bus to the transportation company

6. The sale of books to a university

7. The sale of vegetables to a retailer

FUNCTIONS OF WHOLESALER

Wholesalers serve as important links between the manufacturers and retailers. They perform all or any of the following:

1. Anticipating customers needs

2. Selling promotion

3. Financing

4. Storage

5. Breaking bulk

6. Transportation

7. Risk taking

TYPES OF WHOLESALERS

Wholesalers may be classified according to the functions they perform. They are either;

1. Full function wholesalers

Merchant wholesalers

Sales offices and branches

Agents

Brokers and commission houses

2. limited function wholesalers

Drop shippers

Truck distributors

Mail-order wholesalers

Cash-and-carry wholesalers

Cooperatives

Rack jobbers

3. Industrial wholesalers

Those also serving the retailers

- sales branches

- brokers

- manufacturers agents

- combination houses

Industrial distributors serving only the industrial market

- general line wholesalers

- specialty line wholesalers