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Published on: 13/05/2022
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Questions + Answers key
Take MCQ Commerce Test1.
Explain the services of wholesalers to manufacturer.
2.
Enumerates merchant wholesalers.
3.
What are indirect channel through middlemen?
4.
Differentiate Wholesaler and Retailer.
5.
Write a note on VAR.
1.
The services of wholesalers to manufacturer are:
(i) Economies in large scale:
A wholesaler buys goods in bulk and, thereby, enables the producers to produce goods on a large scale. Large-scale production helps to reduce the cost of production per unit.
(ii) Assistance in distribution:
Wholesalers collect orders from a large number of retailers scattered over a wide area and buy goods in bulk from producers. He
enables producers to reach customers scattered over different parts of the country by distributing goods through retailers located in different areas. Therefore producer can concentrate only on production.
(iii) Warehousing facility:
A wholesaler holds large stock of goods in his private warehouse or in a rented warehouse. In this way he relieves the manufacturer from the function of warehousing.
(iv) Forecasting of demand:
A wholesaler collects information from retailers about the nature and extent of demand and passes it onto the producers and enables them to produce goods according to the needs, tastes and fashions prevailing in the market.
(v) Publicity of goods:
Often wholesalers launch advertising campaign to boost the demand for the goods. Producers get the benefit of such publicity and thus enabled to spend less on advertising.
(vi) Financial assistance:
A wholesaler often makes advance payments to producers. He buys the goods as soon as they are produced. Producers need not lock up their capital in maintaining huge stock of goods.
(viii) Risk-bearer:
A wholesaler provides a ready market to producers by placing advance orders and relieves the manufacturer from the risk of loss due to fluctuation in demand and storage of goods. He also reduces the risk by matching seasonal demand.
2.
Merchant wholesalers:
Merchant wholesalers are wholesalers who take title to the goods. They are also sometimes referred to as distributors, dealers, and jobbers. This category includes both full-service wholesalers and limited-service wholesalers. Full-service wholesalers perform a broad range of services for their customers, such as stocking inventories, operating warehouses, supplying credit to buyers, employing salespeople to assist customers, and delivering goods to customers.
(i) Limited- Service wholesalers offer fewer services to their customers but lower prices. They might n it offer delivery services, extend their customers credit, or have sales forces that actively call sellers. Small retailers often buy from cash-and-carry wholesalers to keep their prices as low as big retailers that get large discounts because of the huge volumes of goods they buy.
(ii) Drop shippers are another type of limited-service wholesaler. Although drop shippers take title to the goods, they don't actually take possession of them or handle them. They deal with goods that are large or bulky. Instead, they earn a commission by finding sellers and passing their orders over to the producers, who then ship them directly to the sellers. Mail-order wholesalers sell their products using catalogs instead of sales forces and then ship the products over to buyers.
(iii) Truck jobbers (or truck wholesalers) actually store products, which are often highly perishable (eg. fresh fish), on their trucks. The trucks make the rounds to customers, who inspect and select the products they want straight off the trucks.
(iv) Rack jobbers sell specialty products, such as books, hosiery, and magazines that they display on their own racks in stores. Rack jobbers retain the title to the goods while the merchandise remains physically in the stores for sale. Periodically, they take count of what's been sold off their racks 'and then bill the stores for those items.
3.
Indirect channel or distribution through middlemen are:
(i) Contract Distributors or Contract Logistics:
The large-scale producer outsources the warehousing, transporting, and distribution functions to a third party on contract. The contractor may process orders, collect payments and carry out customer service also.
(ii) Manufacturer-Value Added Reseller (VAR)or Distributor-Customers:
The VARs receive the products from the manufacturers, incorporate them as if their own products by adding value-enhanced service, and sell them to customers.VARs provide highly skilled technical support so that the customer can have world-class satisfaction.
(iii) Manufacturer-Channel partner-Consumers:
An agreement is entered in between the producer and channel partner. The producer trains the technicians of the partner and provides certification that quality product and service is assured from the partner.
(iv) Manufacturer-franchisor-Consumers:
Producers adopt this channel to distribute goods or services in the home country and foreign countries.
(v) Manufacturer-Retailer-Consumer:
The producer appoints a network of retailers. The storage, warehousing, transport and distribution functions are undertaken by the producer himself.
(vi) Manufacturer-Wholesaler-Retailer-Consumer:
The manufacturer engages wholesalers to purchase products from them as soon as the production is over. The storage, warehousing, transport and distribution functions are carried out by the wholesalers.
(vii) Producers-Agent-Wholesaler-Retailer-Consumer:
In addition to the above channels of distribution, the middlemen, agents play the role of producers and wholesalers. They gather the agricultural produces or fishes from boats operators.
(viii) Manufacturer-Authorised Dealers-Consumers:
To retain control over the relationship with consumers, the manufacturer appoints authorized dealers. They receive all the goods produced by the manufacturer and sells them ill smaller quantities to retailers.
4.
| Sl.No | Bases of Differences | Wholesaler | Retailer |
|---|---|---|---|
| 1 | Link | A wholesaler serves as a link between producers and retailers. Wbolesaler is the first link in the chain of distribution of goods | A retailer provides a link between wholesalers and consumers. retailer is the last link in the chain of distribution of goods |
| 2 | Scale of operations | A wholesaler carries on business on a large scale and requires huge capital | A retailer, deals generally on a small scale and capital invested in retail trade is relatively small |
| 3 | Range of goods | A wholesaler generally deals in one commodity | A retailer deals in II large variety goods and caters to the diverse needs of his end customers. |
| 4 | Dealings | A wholesaler generally sells goods to retailers on credit | A retailer usually sells goods to end consumers on cash basis |
| 5 | Purpose of selling | A wholesaler sells goods for resale | A retailer sells goods for ultimate consumption or use. |
| 6 | Source of supply | A wholesaler buys goods from manufacturers and their agents in large quantities. | A retailer generally buys goods from wholesalers and their agents in small quantities. |
| 7 | Location | A wholesaler operates his business in big commercial cities and expands his business to different areas. | A retailer operates in a smallest village and also big cities and locates his business in particular place of area. |
5.
The VARs receive the products from the manufacturers, incorporate them as if their own products by adding value enhanced service and sell them to customers. VARs provide highly skilled technical support so that the customer can have world class satisfaction. Microsoft India has appointed Avnet and Redington as VARs in India. A solar panel producer may. have builders as VARs and the builders offer solar panel as additional facility to the buyers of flats, etc
11th Standard Syllabus & Materials
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Tamilnadu Stateboard 11th Standard Subjects

Maths

Commerce

Economics

Biology

Business Maths and Statistics

Accountancy

Computer Science

Physics

Chemistry

Maths

Biology

Economics

Physics

Chemistry

History

Business Maths and Statistics

Computer Science

Accountancy

Computer Applications

History

Computer Technology

Commerce

Computer Applications

Computer Technology

Tamil

English

French
Tamilnadu Stateboard Standards