Wholesaling

Concept of Wholesaling

Wholesaling refers to all the activities involved in selling goods and services to those buying
for resale or business use, rather than for personal consumption. Wholesalers serve as
intermediaries between manufacturers and retailers or industrial/business buyers.

• Wholesalers usually buy in bulk from producers and sell in smaller quantities to
retailers.
• They do not typically deal directly with final consumers.
• Operate from warehouses or distribution centers, not retail outlets.

Importance of Wholesaling

1. Facilitates Large-Scale Production

o Manufacturers can focus on producing in bulk without worrying about small-
scale distribution.
2. Reduces Distribution Burden on Manufacturers
o Handles logistics, warehousing, and smaller order processing.
3. Bridge Between Producer and Retailer
o Connects production to consumption efficiently.
4. Provides Working Capital Support
o Offers credit to retailers and often buys from manufacturers in advance.
5. Price Stabilization
o Manages inventory to reduce market fluctuations.
6. Efficient Distribution
o Streamlines delivery and reduces transportation costs for retailers.
7. Risk Sharing
o Bears risks related to storage, damage, spoilage, and unsold stock.

Functions of Wholesalers

Function Explanation
1. Buying and Purchases bulk quantities from various producers and assembles a
Assembling wide assortment of goods.
Maintains large inventories in warehouses until required by
2. Storage
retailers.
Arranges transport from manufacturers to storage facilities and then
3. Transportation
to retailers.
Provides credit facilities to retailers and pays manufacturers in
4. Financing
advance.
 Function Explanation
Takes on risks like spoilage, theft, price decline, and unsold
5. Risk Bearing
inventory.
Shares insights and trends about customer preferences with
6. Market Information
producers.
7. Grading and Sorts, grades, and sometimes packages goods to make them sale-
Packaging ready.
8. Price Stability Regulates supply in the market, thus stabilizing prices.
9. Promotional
Offers promotional schemes or product training to retailers.
Support

Wholesaler Marketing Decisions

Wholesalers, though operating behind the scenes, make several important marketing
decisions to effectively serve retailers and business buyers. These decisions are similar to
those made by retailers but are tailored to B2B (business-to-business) operations.

1. Target Market Decisions

• Segmentation: Identify and segment potential business customers (e.g., small

retailers, supermarkets, institutions).
• Targeting: Select the most profitable segments (e.g., focus on independent grocers or
hardware stores).
• Positioning: Position the wholesaler as a reliable, efficient, or low-cost supplier.

Example: A wholesaler may target only high-volume supermarket chains with bulk
orders and personalized services.

2. Product Assortment Decisions

• Decide what product lines to carry (e.g., electronics, groceries, clothing).

• Offer a wide or narrow assortment, depending on the target market.
• Maintain the right depth of inventory (number of items per product line).

Factors considered:

• Customer demand
• Seasonal variations
• Storage capacity
• Supplier relationships
3. Pricing Decisions

• Use cost-based, competitive, or value-based pricing methods.

• Offer discounts and trade margins to incentivize bulk purchases.
• Ensure prices cover operational costs and offer competitive advantage.

Common pricing practices:

• Quantity discounts
• Seasonal discounts
• Credit terms

4. Promotion Decisions

Although wholesalers don’t typically promote to end consumers, they promote to retailers
and business clients.

Tools Used:

• Personal selling – Sales representatives build relationships with buyers.

• Trade shows and exhibitions – To showcase products.
• Catalogs, brochures, and digital marketing – For order promotion.
• Email marketing & B2B platforms – To stay connected with buyers.

5. Place (Distribution) Decisions

• Choose warehouse locations that minimize transportation costs and ensure timely
delivery.
• Determine the best channel structure – direct from manufacturer or via
agents/distributors.
• Decide whether to use own fleet or third-party logistics (3PL) providers.

Key factors:

• Proximity to retailers
• Infrastructure and logistics support
• Technology-enabled distribution

6. Customer Relationship Management (CRM)

• Maintain strong, long-term relationships with retailers.

• Use CRM tools to track purchases, preferences, and feedback.
• Offer after-sale services and support.
7. Technology Integration

Modern wholesalers rely on technology for better decision-making:

• ERP systems – For managing inventory and orders.

• Data analytics – For understanding customer trends.
• E-commerce portals – For B2B order processing.

Summary Table:

Decision Area Key Actions

Target Market Segment, target, position
Product Assortment Decide variety & depth
Pricing Discounts, margins, credit terms
Promotion Trade shows, personal selling
Place Warehouse, logistics, channel decisions
CRM Relationship-building and service
Technology Use of ERP, analytics, B2B e-commerce

Trends in Wholesaling
Wholesaling has seen significant changes due to technology, globalization, changing buyer
behavior, and supply chain innovations. Wholesalers are adapting to stay competitive and
relevant in a rapidly transforming business environment.

1. Technology Integration

• Use of Enterprise Resource Planning (ERP) systems for inventory, order, and
customer management.
• Automation in warehouses: robotics, barcoding, and RFID tracking.
• E-commerce platforms for B2B orders.
• Data analytics to forecast demand and manage supply chains.

Example: Many wholesalers now offer real-time inventory updates and order tracking for
their retailers.

2. Rise of E-Wholesaling / Online B2B Platforms

 • Growing presence of digital wholesale marketplaces (e.g., Alibaba, Udaan).
• Retailers prefer placing orders online for convenience and transparency.
• Self-service portals with product catalogs, pricing, and customer support.

3. Direct-to-Retail Models

• Some manufacturers are bypassing traditional wholesalers and directly supplying to

retailers.
• In response, wholesalers are focusing on adding more value (e.g., logistics,
financing).

4. Value-Added Services

Wholesalers are expanding their roles by offering:

• Packaging and labeling

• Custom orders or product bundling
• Marketing support to retailers
• Training and product demos

5. Global Sourcing and Distribution

• Wholesalers are sourcing from international suppliers to provide variety and

competitive prices.
• Managing cross-border logistics and compliance has become a key skill area.

6. Focus on Niche Markets

• Specialization in certain sectors (e.g., organic foods, medical supplies).

• Building expertise and stronger relationships with niche retailers.

7. Sustainability and Green Practices

• Emphasis on eco-friendly packaging, reduced waste, and ethical sourcing.

• Wholesalers are aligning with the sustainability goals of retailers and end consumers.

8. Consolidation and Mergers

 • Smaller wholesalers are merging or being acquired by larger ones.
• Helps in gaining economies of scale and broader market reach.

9. Improved Customer Relationship Management (CRM)

• Use of CRM systems to maintain long-term relationships with retailers.

• Personalized communication and loyalty programs for business clients.

10. Omnichannel Capabilities

• Integration of offline and online channels.

• Wholesalers are supporting retailers in both physical and digital retail strategies.

Concept of Retailing

Retailing refers to all the activities involved in selling goods and services directly to the
final consumers for personal use. It includes a wide variety of store types and formats, both
physical and digital.

Trends in Retailing refer to the ongoing changes and innovations in the retail industry in
response to evolving customer expectations, technological advancements, and competitive
pressures.

Importance of Studying Retail Trends

1. Understanding Consumer Behavior

Helps businesses adapt to changes in shopping preferences and lifestyle.
2. Strategic Planning
Retailers can plan inventory, marketing, and operations more effectively.
3. Competitive Advantage
Staying updated with trends helps retailers stay ahead of competitors.
4. Innovation & Customer Engagement
Trends encourage innovation and better customer experience.
5. Global Market Adaptation
Helps local retailers compete with global brands and online giants.

Key Trends in Retailing

 Trend Description
Seamless integration of offline and online experiences
1. Omnichannel Retailing
(store, app, website).
Online shopping platforms expanding rapidly with home
2. E-Retailing Growth
delivery and digital payments.
3. Mobile Commerce (M-
Increasing use of smartphones and apps for shopping.
commerce)
Creating unique in-store experiences to attract and retain
4. Experiential Retailing
customers.
Use of customer data to offer personalized
5. Personalization & AI
recommendations and promotions.
Retailers offering subscription boxes (e.g., beauty, snacks,
6. Subscription-Based Models
books).
7. Self-Checkout & Faster, safer checkout options using tech like QR codes,
Contactless Payments NFC, etc.
Eco-friendly packaging, ethically sourced goods, and green
8. Focus on Sustainability
store design.
Short-term stores/events for launching products or creating
9. Pop-Up Stores & Events
buzz.
Selling directly via social media platforms like Instagram,
10. Social Commerce
Facebook, WhatsApp.

Functions of Modern Retailing

Function Explanation
1. Assortment of
Offers a wide range of goods to meet diverse consumer needs.
Products
Buys in large quantities and sells in smaller units suitable for
2. Breaking Bulk
individual consumers.
3. Providing Information Educates customers about products, usage, and promotions.
4. Facilitating Services Includes home delivery, installation, credit, and return policies.
5. Creating Utility Provides time, place, possession, and form utility to customers.
Makes shopping easier through accessibility and store
6. Customer Convenience
ambiance.
Uses marketing and promotions to create interest and boost
7. Demand Generation
sales.
8. After-Sales Service Offers support like warranties, exchanges, and customer care.
9. Branding & Helps manufacturers build brand image via attractive displays
Merchandising and packaging.
Gathers customer opinions to improve service and product
10. Feedback Collection
offerings.
Retailing: Indian vs. Global Scenario
Retailing varies significantly across countries due to differences in economic development,
infrastructure, technology adoption, consumer behavior, and regulatory environment.
Understanding these differences is essential for global businesses and policymakers.

Indian Retail Scenario

1. Highly Fragmented Market

• Dominated by unorganized retail (kirana stores, street vendors).

• Organized retail (supermarkets, malls) is growing but still developing.

2. Rapid Growth of Organized Retail

• Driven by rising income, urbanization, and changing lifestyles.

• Emergence of chains like Reliance Retail, DMart, Tata’s Croma, Big Bazaar (now
Smart Bazaar).

3. E-Retail Boom

• Massive growth in e-commerce through platforms like Amazon, Flipkart, Meesho,

Ajio.
• Increasing use of digital wallets and UPI for payments.

4. Role of Traditional Formats

• Kirana stores still account for over 75% of retail sales.

• Trust, credit facility, and convenience keep them relevant.

5. FDI Restrictions

• Limited Foreign Direct Investment (FDI) in multi-brand retail.

• FDI allowed up to 100% in single-brand retail under certain conditions.

6. Tech Adoption in Tier 2 & 3 Cities

• Small retailers adopting POS systems, inventory software, and WhatsApp business
tools.

7. Government Initiatives

• Schemes like Digital India, Make in India, and ONDC (Open Network for Digital
Commerce) to support modern retail.
 Global Retail Scenario

1. Highly Organized and Mature

• Majority of retail in countries like the US, UK, Germany, and Japan is organized.
• Large global chains: Walmart, Carrefour, Tesco, IKEA, Target dominate the
market.

2. Advanced Technology Integration

• Use of AI, IoT, robotics, and big data analytics in inventory, customer service, and
marketing.
• Smart stores with self-checkout, digital kiosks, AR/VR shopping.

3. Omnichannel Dominance

• Seamless integration of online and offline shopping experiences.

• Use of apps, loyalty programs, and personalized marketing.

4. Sustainability and Ethical Retailing

• High consumer demand for eco-friendly, ethically sourced products.

• Retailers emphasize green supply chains, recycling, and carbon neutrality.

5. Strong Supply Chain Infrastructure

• Highly efficient logistics and warehousing systems.

• Advanced cold chain for food and pharma retailing.

6. International Expansion

• Global retailers often enter new markets through franchising, joint ventures, or
partnerships.

Comparison Table: Indian vs. Global Retail

Aspect India Global (US/Europe/etc.)

Fragmented, mix of organized &
Market Type Largely organized
unorganized
Reliance, DMart, Tata, Amazon
Major Players Walmart, Tesco, Carrefour, Target
India
Growing, especially in metros &
Technology Use Highly advanced
online
E-commerce Rapidly expanding Mature & omnichannel
Customer Value-conscious, preference for
Brand and quality-focused
Behavior local
 Aspect India Global (US/Europe/etc.)
Kiranas, malls, supermarkets, e- Department stores, convenience,
Store Formats
retail hypermarkets
FDI Policy Restricted in multi-brand retail Open market, fewer restrictions
Sustainability Strong consumer and regulatory
Emerging trend
Focus focus

Retail Formats: Store & Non-Store Retailing

Concept of Retail Format

A retail format refers to the structure or model used by retailers to deliver goods and
services to consumers. It defines how, where, and in what manner the customer interacts with
the retailer.

Retail formats are broadly classified into:

• Store-Based Retailing
• Non-Store Retailing

1. Store-Based Retailing (In-Store)

Involves physical retail outlets where consumers visit and purchase goods/services.

Types of Store-Based Formats

Format Description Examples

Department Large store with various product categories under Shoppers Stop,
Store one roof Macy’s
Supermarket Self-service store offering food and household goods Big Bazaar, DMart
Combination of supermarket and department store – Walmart, Reliance
Hypermarket
wide variety and bulk sales SMART
Nike Store, Apple
Specialty Store Focus on one specific product category
Store
Convenience Small store with essential items, open for extended
7-Eleven, In & Out
Store hours
Sells products at lower prices, often in bulk or with
Discount Store DMart, Dollar Tree
limited services
 Format Description Examples
Direct-to-consumer stores from manufacturers, Levi’s Factory
Factory Outlet
usually discounted Outlet

2. Non-Store Retailing
Involves selling goods and services outside the boundaries of a physical store. It offers
convenience, 24/7 availability, and reach to a larger customer base.

Types of Non-Store Formats

Format Description Examples

E-Retailing (Online Selling through websites, apps, or
Amazon, Flipkart, Nykaa
Retailing) online marketplaces
Selling via phone calls with a
Telemarketing Credit card sales, insurance
personal pitch
Television Home Products sold through TV channels
Naaptol, HomeShop18
Shopping with live demos
Sales through direct interaction at
Direct Selling Amway, Oriflame
customer’s home or workplace
Mail Order / Catalog Selling via printed catalogs, orders Vistaprint, IKEA (earlier
Retailing placed by post or phone catalog-based)
Automatic Vending Machines selling snacks, beverages, Coffee or snack vending
Machines or electronics machines in malls, airports
Mobile-based shopping via apps or
M-Commerce Myntra app, Blinkit
browser

Comparison: Store vs. Non-Store Retailing

Factor Store Retailing Non-Store Retailing
Physical Presence Requires physical outlet No physical outlet needed
Customer Interaction Face-to-face Remote / virtual
Convenience Limited to store hours & location 24/7 access from anywhere
Cost Structure Higher (rent, staff, utilities) Lower operational cost
Reach Limited to geographic location Global or nationwide reach
Personalization Moderate High (with tech and data use)

Franchising
Definition:
Franchising is a business model where a franchisor grants the right to use its brand, business
model, and support system to a franchisee, in exchange for a fee and ongoing royalties.

Types of Franchising:

1. Product Distribution Franchising:

o Franchisee sells the franchisor’s products.
o Example: Coca-Cola, automobile dealerships.
2. Business Format Franchising:
o Franchisee adopts the franchisor’s entire system (brand, operations,
marketing).
o Example: McDonald’s, Subway.

Features:

• Brand consistency.
• Standardized operations.
• Training and support.
• Initial franchise fee & royalties.
• Contractual agreement.

Advantages:

• Rapid expansion.
• Lower capital investment for franchisor.
• Motivated franchisees.
• Shared risk.

Disadvantages:

• Loss of control.
• Brand reputation at risk.
• Potential legal issues.
• Franchisee dependency.

Unconventional Channels
Definition:
Unconventional (non-traditional) channels refer to non-store or innovative distribution
methods that go beyond the typical retail outlets.

Examples:

1. Direct Selling – Products sold directly to consumers (e.g., Amway).

2. Vending Machines – Automated retailing (e.g., snacks, electronics).
 3. TV Home Shopping – Shopping through television networks.
4. Mobile Retailing – Temporary/mobile units like food trucks or pop-up shops.
5. Catalog Retailing – Consumers order from printed catalogs.
6. Kiosks – Small booths located in high-traffic areas.

Benefits:

• Low operational cost.

• Wider geographic reach.
• Flexibility and mobility.
• Personalized service (in some formats).

Challenges:

• Limited product display.

• Inventory management.
• Trust and awareness issues.
• Regulatory hurdles.

E-Retailing (Electronic Retailing)

Definition:
E-retailing involves selling goods/services to consumers via online platforms (websites,
apps, marketplaces).

Types:

1. B2C (Business to Consumer) – Amazon, Flipkart.

2. C2C (Consumer to Consumer) – eBay, OLX.
3. B2B (Business to Business) – Alibaba.

Features:

• 24/7 availability.
• Digital catalogs and payment systems.
• Personalized recommendations.
• Logistics and delivery systems.

Benefits:

• Cost efficiency (no physical store).

• Convenience to customers.
• Wide product assortment.
• Real-time inventory and data tracking.
Challenges:

• Cybersecurity threats.
• High competition.
• Delivery & returns logistics.
• Trust issues with new retailers.

Retail Location: Factors Affecting Location Decision

1. Customer Accessibility

• Proximity to target market.

• Ease of access (transportation, parking).

2. Traffic and Footfall

• High visibility areas attract more walk-ins.

• Malls, markets, intersections.

3. Cost of Location

• Rent, property cost, taxes.

• Operational costs like utilities and security.

4. Competition

• Presence of competitors can be both good (footfall) and bad (market share).

5. Availability of Labor

• Retailers need access to skilled/unskilled labor.

6. Infrastructure

• Power, water, internet, road connectivity.

7. Legal and Regulatory Factors

• Zoning laws.
• Licensing requirements.

8. Socioeconomic Factors

• Income level and lifestyle of nearby population.

 Retail Location: Site Selection
Site selection involves choosing a specific site or premises within a selected geographic
location.

Key Factors in Site Selection:

1. Size of the site – Must meet space requirements.

2. Visibility – From main roads or high-traffic areas.
3. Accessibility – Entry/exit ease, parking, public transport.
4. Neighboring businesses – Complementary stores increase attraction.
5. Foot traffic data – Analysis of consumer movement.
6. Rental terms & conditions – Lease duration, escalation clauses.
7. Zoning compliance – Suitable for retail activities.

Location-Based Retail Strategies

1. Isolated Store Location

• Standalone store, independent from others.

• Example: IKEA on city outskirts.
• Advantage: No direct competition, lower rent.
• Disadvantage: Low foot traffic.

2. Unplanned Business District

• Clustered businesses without planning.

• Example: Local markets.
• Advantage: Natural traffic.
• Disadvantage: High competition, infrastructure issues.

3. Planned Shopping Centers/Malls

• Designed for retail – anchor tenants, shared facilities.

• Example: Shopping malls.
• Advantage: High footfall, shared promotions.
• Disadvantage: High rent, strict regulations.

4. Central Business District (CBD)

• Downtown area with commercial activity.

• Advantage: High traffic, prestige.
• Disadvantage: Expensive, congested.
5. Neighborhood/Community Centers

• Serve local population.

• Advantage: Proximity, loyalty.
• Disadvantage: Limited market size.