Theory question 102
Wholesale TradeCommerce 2 (essay)
(a) State five functions performed by the wholesaler in the channel of distribution
(b) Explain five factors that encourage the elimination of middlemen from the channel of distribution
Show the model answer
(a) Any five: buys in bulk from manufacturers and breaks bulk for retailers; warehousing/storage; finances manufacturers (prompt payment) and retailers (credit); bears risks; grades, packs and brands goods; transports goods; gives information and advice between makers and retailers; stabilises prices.
(b) Any five, explained: manufacturers have their own transport and warehouses; large-scale retailers (supermarkets, chain stores) buy direct; goods are branded, pre-packed and advertised; perishable goods need quick delivery; technical goods need expert advice and after-sales service; costly goods of high value; manufacturers want to control prices and quality; to reduce prices by cutting middlemen's profit; good communication and credit facilities; co-operative societies buying direct.
In (b) say why the manufacturer or retailer no longer needs the wholesaler.