Why a wholesaler should not be eliminated in the chain of distribution?
Wholesalers have fulfilled such demand in the field of marketing. They should not be eliminated because they have gained special knowledge and experience in sales and distribution of goods. If wholesalers are eliminated, consumers will feel difficulties to bet necessary goods to satisfy their needs.
Under which circumstances can a wholesaler be eliminated from the chain of distribution?
Reasons for the elimination of the wholesaler. Have their own transport. Own their own warehouses. It is cheaper to buy from the producers/ manufacturers directly. All manufacturer’s goods are branded and are easy to sell directly to the retailers.
Why is the wholesaler important in the chain of distribution?
Wholesaler is an important chain of the channel of distribution because it is an agent between a manufacturer and retailers. A wholesaler purchases the goods from manufacturer in bulk quantity and re-sells it to retailers in small quantity. Wholesalers occupy a pivotal place in the marketing channel set-up.
What happens when a wholesaler is eliminated from a marketing channel?
Eliminating the middleman usually creates a win-win for the seller and buyer from a money perspective. This ultimately makes the final customer’s price higher because he is paying for the original product costs, the costs of each buyer’s acquisition as well as the profit expected by the retailer.
Why wholesalers Cannot be eliminated?
Since the wholesaler enjoys a monopolistic position, he takes undue advantage of the situation and charges exorbitant prices from his customers. Thus, if such a wholesaler is eliminated, the retailers and consumers would be favourably affected.
Should middlemen be eliminated in the chain of distribution?
In theory, eliminating the middlemen sounds like a good idea. This would help to lower costs for consumers who could buy products for less and for businesses who could sell their products for less. You don’t have to go directly to a bakery to buy bread and other bakery products.
Are there circumstances where middlemen can be eliminated?
Middlemen can be “eliminated”, but not their functions. Even in the shortest supply chain, say online buying, middlemen are needed at some points along the chain. For instance, a broker is needed to match orders and supplies, warehouses for storage and transporters for shipment.
What are the 4 channels of distribution?
There are basically four types of marketing channels:
- Direct selling;
- Selling through intermediaries;
- Dual distribution; and.
- Reverse channels.
What are the three types of wholesalers?
TYPES OF WHOLESALERS The three categories used in the Census of Wholesale Trade are: 1) merchant wholesalers; 2) agents, brokers, and commission merchants; and manufacturers’ sales branches and offices.
Under what circumstances can middlemen be eliminated?
Why should Wholesalers be eliminated?
The profit margin of the wholesaler increases the cost of the product and it adversely affects the ultimate consumer. Thus by eliminating him, the consumer will be benefited since he would be required to pay a less price for his purchases.
What are the disadvantage of middlemen?
Disadvantages of Middlemen A higher price is charged at each junction to cover the cost of warehousing, insurance, transportation, advertising, etc. When a profit margin for each middleman is also factored in, consumers ultimately must bear the price of having intermediaries in the channel.
Why do we need to remove wholesalers from the distribution chain?
The appointment of authorised dealers or official distributors who sell directly to retailers and consumers. Perishable goods necessitate the need to shorten the distribution chain. Some goods are fragile and thus require special handling which only the producer can provide and are thus sold directly to the consumer by manufacturers themselves.
What happens to prices when wholesalers are eliminated?
They increase the cost of marketing and price of the products goes up. The consumers have to pay higher price. By eliminating wholesalers, prices of the products will decrease and the consumer shall benefit. The manufacturers will be earning more profit on account of lesser prices of the products.
How are wholesalers treated by retailers and manufacturers?
(vi) Some wholesalers give partial treatment to some retailers. Thus, if such wholesalers are eliminated, all the retailers will be treated similarly by the manufacturers. (vii) Most of the wholesalers are transfer agents and most of their services are superfluous in nature.
What are the arguments for and against wholesalers?
The very first argument of critics of wholesalers is that particularly there is no need for services of wholesaler. They argue that most of the manufacturers use their own brand and Trademark for their products.