Wholesaling is a business intermediary where they buy products from different manufactures
and sell it to the other businesses such as retailers, contractors, industry users etc present in
particular market/location.
Master Distributors are like a platform where they interact with the multiple manufacturers
and receives products from them. Then, they sell it to the bunch of wholesalers who spread
across the geography. They act like a single point of contact between multiple manufacturers
and whole lot of wholesalers. Master distributors give economies of scope, scale, will solve
distributor problems like emergency inventory, logistic support.
Multiple Master Retailers,
Wholesalers
manufacturers Distributor contractors
The other supply chain partners included in the system are Agents, brokers, commission
agents, and third-party logistics providers etc.
Wholesaling strategies: The three main challenges of the wholesaling are
1. Doing the job correctly 2. Doing the job effectively 3. Doing the job efficiently
Value-adding activities of wholesalers are
1. Info about buyers, suppliers, products 2. Having a robust & Efficient infrastructure 3.
Putting right product in right place at right time 4. Filters the product offering as per
customer info 5. Customization & Assembly (In some cases) 6. Unite knowledge of
supplier & customer at one place
Alliance based wholesaling strategies: The strong alliance between the distributor and
wholesaler will help to tackle unplanned orders, emergency situations and any other delays.
Also, they can utilize the one other warehouse if it required. Another strategy is federation of
wholesalers, where bunch of wholesalers stay together as group and support each other,
maintain the mutual co-operation to enhance the business operations.
Wholesaler-Led initiatives: Wholesaler-distributors alliance, consortium and alliance
through a holding company. Manufacturer led initiatives (Decentralized warehouses to
connect the distributors) means they coordinate the distributors and merge them to
combinedly use their potential at maximum and integrate the supply chain across the location.
In textbook, they have taken the example of Volvo, Volvo has setup central warehouse to
solve the problem of demand variability and late supply of products which was actually the
problem of dealers. Retailer sponsored co-operatives, these activities are initiatives of
retailers to take advantage of economies of scale and to tackle the cut-throat competition. Ace
hardware corporation was the apt example of retailer co-operatives. They have created a
membership fees, stocks and sums to attract the dealers to be part of the firm and derive the
value from it. Another example is AMUL from India which is cooperative society in Gujarat
later formed as a firm. Consumer co-operatives are initiatives taken by the consumers to avail
benefits of low price, discounts and other. Consolidation of wholesalers is also one of key
strategies used by the wholesalers in order to expand their network and capacity in
geographic location. This consolidation hampers the manufacturers ability to maintain
relations with multiple wholesalers and direct selling to customers. To mitigate this,
manufacturers has four options. Those are, partnering with consolidators, investing in small
wholesalers, vertically integrating forward and investing in self to build capabilities to
survive. If they implement them well, they can successfully mitigate the risks from
wholesaler’s consolidation. Due to wholesaler consolidation, four types of firms emerge in
the market. They are catalyst firms, late entrants who act in niches, specialists accustomed to
present environment and generalists who know the depth and breadth of that business.
Wholesalers can also act globally; many domestic wholesalers’ combination had expanded
their operations internationally. But considering their nature and way they operate;
wholesaler will never be truly global. And Wholesalers has started using the Omni-channel
distribution for their operations after the retailer. The main issue for wholesalers to use an
omni channel for customers is integration of their present services with omni channels
activities. Through the time, wholesalers started fulfilling orders from their inventory without
any intermediator between them. B2b online exchanges is a wholesaler business which
operates online to buy products from multiple suppliers and sell it to customers by
eliminating middle men. Online reverse auction is a way that products sold online through
bidding. Winner submits the lowest bid before the time-out. Fee for services is charging the
customer for the services you provide. This fee is addition to the product price. It emerges out
from hybrid of pricing model and value model. It means, charging a customer for product and
also any additional service he gets. By vertical integration of manufacturing into wholesaling
results in power retailers. They utilize their product and brand power to bypass the
independent wholesaler & distributor and establish their own branches.
