Part 4: Channel Institutions Chapter 12: Wholesaling

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Part 4 Channel InstitutionsChapter 12
Wholesaling

• MKTG 406 Pimentel

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Wholesaling Defined

• Wholesale businesses sell physical inputs and
  products to other businesses
• Do not sell to ultimate household consumers
• Do sell to
• Retailers
• Other wholesalers/distributors
• Contractors
• Industrial users
• Institutional users
• Commercial users

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Channel Members Doing Wholesaling
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Wholesaling and Channel Flows

• Physical possession
• Ownership
• Promotion
• Negotiation
• Financing
• Risking
• Ordering
• Payment

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3 Great Challenges of Wholesaling

• Correct
• Effective
• Efficient

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IT is Key

• Supply side
• Automated picking
• Automated inventory control
• UPC
• RFID

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IT is Key

• Demand side
• Automated inventory
• Automated reorders
• JIT inventory solutions
• Collaborative filtering

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Efficient Infrastructure

• Economies of scope
• Economies of scale

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Master Distributors
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Master Distributors
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Master Distributor
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Organizations of Wholesalers

• Integrated supply
• Manufacturer-led initiatives
• Wholesalers-led initiatives

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Organizations of Retailers

• Voluntary group
• Co-op

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Consolidation

• Fewer, but bigger, more efficient wholesalers
• Economies of scale to justify capital investments
  needed for automation
• Pressure from customers
• Pressure on manufacturers

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International Expansion

• Wholesaler-distributors rarely go global
• Acquire foreign wholesaler-distributors

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Wholesaling and the Internet

• A tool, not a replacement
• Last mile problem
• B2B online exchanges
• Online reverse auctions

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Key Terms

• Wholesaler
• Distributor
• Manufacturers sales branch
• Manufacturers sales office
• Agent
• Broker
• 3PL
• Picking
• UPC
• RFID
• JIT

• Collaborative filtering
• Economies of scope
• Economies of scale
• Master distributors
• Federations of wholesalers
• Integrated supply
• Manufacturer-led initiatives
• Wholesalers-led initiatives
• Voluntary group
• Co-op

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Key Terms

• Consolidation
• Last mile problem
• B2B online exchanges
• Online reverse auctions