Wholesale Trade Industry

The selling of goods or services in larger quantities at lower cost to retail business, commercial and industrial firms other than customers is known as wholesale trade. Firms that sell their goods to governments, institutions etc are considered as part of wholesale trade. All other retail firms those sell their products with wholesale prices are retail establishments. Wholesale trade has to perform five functions effectively.

  • Physical exchange of produce
  • Sorting of produce as per some standard criteria
  • Formation of a stable price
  • Risk management
  • Exchange of information between suppliers and buyers

Nature of the industry:

Wholesale trade industries are very essential to the financial systems. Wholesale trade industries act as intermediaries between the manufacturers and final customers. When consumers buy goods they usually buy from retail firms like departmental stores, supermarkets etc. When retail establishments or other government or other institutions buy goods for their use they buy from wholesale trade firms in bulk. Wholesale trade industries sell all kinds of goods and their size and scope vary greatly. Usually they accumulate more goods that neither the manufacturer nor the retailers can store until the customers require them.

Marketing and sales functions of wholesale industry:

  • Customer service
  • Order processing
  • Technical support
  • Sales contact
  • Provide a number of customers to the manufacturers
  • To devote minimal time in marketing

Wholesale industry outlook

  • Wholesale trade is expected to grow by 8 percent whereas 14 percent is expected in all other industries combined during the period of 2004-2014.
  • As retail firms grow the large wholesale suppliers will also increase to supply them. Additionally the job openings will also be more.
  • New technologies like Internet, E-commerce; Electronic Data Interchange has changed the shape and scope of the wholesale trade.
  • New radio frequency identification technology is capable of streamlining the inventory control and replaces the manual barcodes.
  • This 21st century will create a demand for computer specialist with knowledge in information technology in the wholesale industry.

Types of wholesalers:

  • Merchant Wholesalers
  • Wholesale electronic agents and brokers

Merchant wholesalers:

Merchant wholesalers buy and sell goods in their own account. Their segment includes sales offices, to perform the marketing functions. Merchant wholesalers deal in both durable and non-durable goods. Durable goods may be new or used, which have life anticipation of 3 years or more. Some of the durable goods are motor vehicles, furniture, machineries etc. Non durable goods are those that have life period of less than 3 years. Some of the goods are paper, textile products, groceries etc. In addition of selling and moving goods, they also provide customer service and technical support most efficiently.

Wholesale electronic agents:

These firms normally sell goods owned by others, in a commission basis. Wholesale electronic agents are not the owners of the goods but act on behalf of the buyers and sellers of the goods. This includes Electronic Data Interchange (EDI) to smooth the progress of wholesale trade.

Working conditions of wholesale trade

Working conditions of wholesale trade are safe, vary greatly and more risk is involved. In some warehouses forklifts are used to move heavy equipments, which is very exhausting. Some warehouses use computer controlled storage, which reduce labor requirements. Outside sales workers spend most of their time in traveling and many of the administrative staffs spend long hours in offices. Produce wholesalers should be on the job before sunrise to receive the consignment of goods and deliver them to the local retailers in the early morning.

Occupational Groups

There are three largest occupational groups in the industry. They are:

  • Office and administrative support workers
  • Sales and related workers
  • Transportation and material moving workers

Office and administrative support workers

Many of office and administrative support workers need at least a high school diploma and some related experience. office and administrative support workers work mostly in inventory management to control inventory. In most industries, general office clerk, secretaries, auditing and accounting clerks, bookkeeping and administrative assistants are employed in wholesale trade. Administrative support staffs mostly perform works like Shipping, receiving, and traffic clerks check the contents of all shipments, verifying condition, quantity, and sometimes shipping costs.

Sales and related workers

Sales and related workers do not need any training but some related experience is necessary. Their work is to attract the customers and make them purchase the goods of a wholesale firm. There are three types of sales people in wholesales trade. They are:

  • Inside sales workers
  • Outside sales workers
  • Sales worker supervisors

Inside sales workers:

Inside sales workers work inside the office and they perform works like problem solving and solicitation of new and existing customers.

Outside sales workers:

Outside sales workers are most skilled and they travel to business places to maintain contact with the existing customers and to magnetize new customers. They make demonstration to management or supervisors about a product of a wholesales firm and devote more time in installation and maintenance. They are also called as sales representative or sales engineers.

Sales worker supervisors:

Sales worker supervisors usually scrutinize and synchronize the work of the sales staff and they perform outside sales work also.

Transportation and material moving workers

They transport goods around the warehouse, pack and load goods for shipment, and transport goods to buyers. Hand packers prepare items for shipment; truck drivers move goods from wholesalers to purchases. At times these workers may visit potential clients with anticipation of generating new customers.

Other than this there are financial operation and management business workers to direct the operations of the firm, operation managers and chief executives to make sure that the firm meets the standards and goals set by the top management.

Benefits of wholesale trade

Benefits of wholesale trade industry can be derived from its physical function and economic function:

Benefits from Physical function:

  • Produce protection of goods
  • Improved handling operations
  • Easier introduction of innovation and new technology

Benefits from Economic functions:

  • Improved market information
  • Specialization of traders
  • Greater stability of supply
Benefits of wholesale markets

Transporter traders and retail traders gain the following Benefits from wholesale markets:

  • Access to a stable market
  • Greater price transparency
  • Reduced marketing risks
  • Reduced operating cost and time

Training and Advancement

Many of the wholesale trade offer on the job training. Some third party training organizations are used by many firms since training is more costly and complex. To increase productivity, an employee responsible for one function is trained with multiple aspects to take over more than one responsibility. Wholesale trade has provided good opportunities for low skilled employees to come up through managerial positions. It is more common in this industry to see an employee who began his career as part time warehouse help in a top level executive position.

Case study: Fruit and vegetable wholesale markets in Morocco

Rabat and Sale are the two wholesale markets in Rabat-Sale Company. In 1974 a wholesale market was built in Rabat with three large structures on a five-hectare plot. In 1994, according to the market administration, Rabat market handled 104000, although the total consumption of the city was 200000. This was the case especially for vegetables. A director and six representatives, who act as tax collectors and cashiers manage the market and all buyers and retailers buy 350 kg of supplies three or four times a week from Rabat or Sale. Apart from the representatives 60 agents were also employed in the market. After a price is agreed, the buyer pays the amount to a representative.

The quantities and prices are recorded by the administration on the basis of issued receipted invoices. Supply system analysis exposes that wholesale markets work under an obsolete regulatory system, which slows down the spread of market trends. Facilities are scarce and there is no uniformity and stability in produce quality.

To develop the wholesale market as a competent distributor of fruits and vegetables the following steps has to be taken: