Group – 7; Sec - B
Chapter 7: Wholesaling Structures & Strategies
Wholesaling Structure:
The given chapter discuss about the different wholesaling structures adopted in different
industries and how it changed over the years. Firstly, wholesaling concept or wholesaler and
distributors which are important players in supply chain of any product from manufacturer to
the consumer. These wholesalers do not sell products to end users but to the other business
partners such as retailers which leads its way to end consumer. Previously wholesaler &
distributor used to have different meaning such as wholesaler having sell to retailers and
distributor to other industrial customers but, now both the terms are used for only same
purpose.
As per some industry reports, it was assumed that industry is dying but inversely it got more
focused and define their objectives for what actually then need to do and take steps according
to that. Like adaptation of automation technology, and improve economies of scale. It
actually helped in new changed seamless interface for wholesalers and distributors. The chain
mentioned like Manufacturer >> Master Distributor >> Wholesaler >> Customer is one
of kind where Master Distributor comes into picture who worked with many manufacturers
and make it easier for chain to manage their operations.
As it is very complicate for wholesaler to decide price for retailers which leads to more
competition among these and for this an example is given for pharmaceutical industry in
USA. During 1978 to 1996, 147 wholesaler firms dropped to 53 and at current time it gets
reduced to 3 firms accounting 90 percent sales. This shows how competition has grown and
acquisitions leads to so a smaller number of firms competing. Only the advantage for any
firm is that, no one got bankrupted the only acquisition has made it more volatiles. The price
from manufacture also plays important role and that’s leads to manufacturing firms to offer
various discounts on different components for these wholesalers. There are also 4PL firms
which offer whole supply chain from manufacturer leading it to make more cost-effective.
Wholesaling Strategies:
Now, if we discuss about the strategies which are adopted by wholesalers and keep on
changing with time there are many such examples. They started taking possession of goods,
ownership and customer prospective and many such things as important factors for their
operations. The main prospective considered by manufacturer and wholesalers are do job
correctly, efficiently and effectively. This build more confidence among the customers and
retailers to get products at effective and affordable prices.
Wholesaler also adopted efficient infrastructure by operating across brands and different
product categories which helped in improving economies of scope for them. The more
efficient upstream and downstream operations helped in using time and utility more
efficiently and reaching to maximum customers more effectively. Also, risk taken by these
wholesaler leads to more confidence to customer and making them believe more on those
product chains.
Later, alliances of wholesaler, initiatives taken by wholesalers are some important strategies
adopted. Alliance helped all players to come together and take decisions which are helpful for
all. As same as wholesaler initiatives, manufacturer also led such initiative to take all their
wholesaler on same platform which can easily manage operations among different segments.
Also, the new trends such as global expansion, omni-channel adaptation, and block chain
technologies are some initiatives helped in operating more effectively. Block chain
adaptation helped like, every partner get real time data, data integrated by all the parties and
as all parties are co-dependent which led to more effective supply chain operations.
Also, some of the strategies like B2B online exchange between manufacturers, wholesalers
and later to retailers, Reverse auction has led to more transparent operations and with more
effectiveness. Fee for services which charges depending on the basis of activities to be
carried out. This means unbundling services and charging differently for every service which
help in improving profitability for firms.
The next strategy which is now getting popular is vertical integration by the manufacturing
firms. Instead od different wholesaler, firms manage their own wholesaling activities and this
leads to more cost-eefectiveness at customer end. Also, power retailers such as Walmart and
other such entities buy very large quantities of different product categories, these operate
their own internal distributor chains this also helps in managing cost effectiveness. Such
integration by manufacturing firms or large firms like power retailers drive the operations for
that particular infustry and the small retailers have to manage their operations accordingly to
manage their prices.
Such changes in industry dynamics of wholesaling and distribution has changed strategies to
improve performance and cost effectiveness among the audience.
