TEXT3: WHOLESALING AND RETAILING

 

Products may pass through several hands from the time they leave the factory to the time they reach the customer. A factory often sells goods in large quantities to a wholesaler.

Wholesaling is part of the marketing system which provides channels of distribution that are used to bring goods to market. Most manufactured consumer goods are marketed through an indirect channel: goods come from manufacturer to the wholesaler to the retailer to the consumer or through a direct channel that moves goods from the manufacturer or producer to the consumer.

Wholesalers are often called distributors. They perform a service in linking the factory and the retailer. The wholesaling middlemen are merchant wholesalers who take title to the goods they deal in. There are also agent middlemen who negotiate purchases or sales or both, but they don't take title to the goods they deal in. These agents don't earn salaries. They receive commissions.

Wholesalers simplify the process of distribution. Since a wholesaler handles a large assortment of items from numerous manufacturers, he greatly reduces the problem of both manufacturer and retailer. The storekeeper doesn't have to deal directly with thousands of different people. He may have a well-stocked store and deal with only a few wholesalers.

The wholesaler sells to retailers. Retailing is selling goods and services to the ultimate consumer. The distribution and marketing of goods, whatever methods are used, cost a great deal of money. The retailer is the most expensive link in the chain of distribution. As middlemen, they make their profits by charging the customer 25 to 100 - per cent more than the price they paid for a given item. Most retailers operate through stores, but there are mail-order houses and vending machine operators. Retail stores vary also, ranging from department stores, discount houses, cooperatives and franchises to single line retailers.

The figure below shows how they fit into the various stages in the production of chocolate.

 

PRODUCERS
Mars	Nestlé	Cadbury	Terry
WHOLESALER
Jones	Smith	Brown	Green
RETAILERS

 

The wholesaler buys goods in bulk from producers and sells them in small quantities to retailers. In doing so he helps production and relieves manufacturers and retailers of the risk of a fall in demand e. g. fashion changes. The holding of stocks is in itself a valuable economic function evening out prices resulting from temporary changes in demand and supply.

 

Vocabulary:

wholesaling	оптовая торговля
wholesaler	оптовый торговец, оптовое предприятие syn. merchant wholesaler
retailing	розничная торговля
retailer	розничный торговец, предприятие розничной торговли
indirect channel	каналы непрямого распространения
channels of distribution	каналы распределения (распространения)
to link	объединять
middleman	посредник
to take title to	приобретать право собственности
to receive commissions	получать комиссионные
to simplify	упрощать
to reduce	уменьшать
ultimate consumer	конечный потребитель
mail-order house (store)	магазины (службы), предлагающие товары на заказ по почте
vending machine operator	специалист по обслуживанию торговых автоматов
discount house (store)	магазин, предлагающий товар по сниженным ценам
franchise	франшиза (фирма, предприятие, обладающее правом производства и продажи продукции другой компании)
to fit	соответствовать, годиться
in bulk	оптом
to relieve somebody of something	освобождать кого-либо, от чего-либо
fall in something	сокращение, спад, паде­ние чего-либо
demand	спрос
supply	предложение
to hold (held, held)	держать
stocks	запасы
to even out	выравнивать
to result from something	быть результатом чего- либо
temporary	временный

Comprehension Questions:

1. What is wholesaling? What are the characteristic features of this process?

2. Do wholesalers simplify the process of product distribution?

3. What is retailing? What are the characteristic features of this process?

4. Why wholesalers and retailers are called middlemen?

5. Is the name of the wholesaler given in the figure?

6. Are Mars, Cadbury and the others, producing companies? What do you know about them, if anything?

7. Who are the retailers of chocolate? Do you think they sell only chocolate in their shops?

 

B. Describe the direct and indirect channels of product distribution according to the following chart, start your description with: “Consumer goods ……………”