Unit 4, 5

Merchant-Wholesalers

Wholesale is buying goods in large quantities from manufacturers and selling or rendering services to those who purchase for further resale or professional usage. There are four kinds of wholesalers:

1) merchants;

2) brokers, agents;

3) manufacturers' wholesale departments and offices;

4) specialized wholesalers.

A wholesaler is a person or an organization that buys the goods in quantities from manufacturers and sells them to retailers who sell directly to the public.

Merchant-wholesalers are independent commercial enterprises which get the title of all the goods they deal in. They comprise the largest group of wholesalers. According to the range of services merchant-wholesalers are divided into two groups:

a) full service merchant-wholesalers can either sell certain ranges of products to retailers or be distributors of industrial purpose goods which are sold mainly to manufacturers.

Distributors can render the customers such services as: crediting, storage and delivery of goods. They can either deal in materials for technical servicing and parts of the equipment like bearings and engines or the equipment itself.

b) limited services merchant-wholesalers deal in a limited range of popular goods which are bought, paid on the spot and transported by retailers themselves, e.g. every morning a fishmonger owning a small shop buys from such a wholesaler several cases of fish, takes the cases to his shop and discharges them himself.

In contrast to merchant-wholesalers brokers and agents do not get the title of the goods and perform only one obligation - to promote sales. They get a 2 - 6% of the selling price of the goods commission for the services rendered.

The main function of brokers is to bring together the buyers and the sellers and help them come to terms. Brokers are paid by the party which has hired them. Brokers do not keep stocks or take part in financing of the deals, they also do not bear any risks. Very often brokers deal in food stuffs, property, insurance or securities.

Agents

Agents represent the seller or a buyer on a long-term basis. There are several types of agents:

a) Producers’ agents represent one or more producers. Agents conclude a separate written agreement with every producer regarding the price policy, territorial borders of their activities, the procedure of orders fulfillment,delivery services, guarantees and the commissions rates. Agents know well the range of goods produced by the seller and organize the sale of the goods using his wide contacts with buyers. Usually agents sell such commodities as furniture, clothing, electric home appliances. Vast manufacturers resort to services of agents to develop new markets whereas hiring of full-time agents is not profitable.

b) Authorized sales agents conclude agreements for sale with producers. Authorized agents act as a sales department and influence to a great extent the prices, time and conditions of sale. They are not limited territorially. Usually they deal in such industries as textile, coal, coke, industrial equipment, chemicals and metals.

c) Purchasing agents conclude long-term agreements with their buyers: purchase for them, check the quality, store and deliver the goods. For instance, purchasing agents may be looking for an assortment of clothes for small retailers. Such kind of agents supply their clients with useful information of the market condition and purchase the goods at best prices.

d) Commission agents get the full title of the goods and a right to sell them independently. They do not conclude long-term agreements with producers. For instance a commission agent gets the agricultural produce from the farmers, sells the goods at best prices, afterwards hands over the revenue to the farmer keeping back the agent's commission and handling costs.

Manufacturers' wholesale departments and offices are formed by the producers to control the stocks. There are two kinds of such departments:

a) sales departments and

b) purchasing departments which are structural units of the manufacturers.

Specialized wholesalers are quite common in some industries. For instance, wholesalers purchasing agricultural produce buy the produce from the farmers and ship in large quantities to various factories of the food industry, to mechanical bakeries and bread-baking plants on behalf of state institutions. Oil distributing wholesale centers supply petrol stations and other retailers with oil products.

UNIT 6