There are two main types of trade: retail and wholesale. What is each of them, what features does it have, and for what purposes is it most suitable?
First of all, the key difference is the volume and type of sales. We sell wholesale, as a rule, large quantities of goods or services that the buyer needs to conduct business. Retail, in turn, consists of sales to end consumers, individuals. It can also be not only single, but also large - it all depends on their needs and desires.
Principles of wholesale trade
Wholesale: what is and what features does this form of trade have? In it, each buyer goes through an identification procedure, that is, an agreement is concluded with each of them. Wholesale buyers are, as a rule, individual entrepreneurs or legal entities. They trade to run their own business, and each has their own specific goals. This can be both the production and consumption of goods, or their subsequent resale. Most often, goods purchased in bulk are intended for resale.
That is, in wholesale trade, the main transactions occur between entrepreneurs and organizations. They are not sold for the needs of the end user, but serve business purposes. The main feature of wholesale trade is the mandatory identification of the buyer.
Diagram and examples
It’s easier to understand what wholesale is using specific examples. The main wholesalers are the manufacturers themselves; they are the ones at the origins of the financial “chain”. They directly create their products and sell them on the market. These products can be very different: clothing, shoes, household appliances, cosmetics, souvenirs, food, etc.
In most cases, manufacturers resell products to other wholesalers, that is, dealers, and those to other resellers. Before a product reaches the final buyer, it will go through many stages of resale. Exactly how much depends on the product itself and the financial state of the market at the moment. At the other end of the chain is the retailer - it is he who sells the products to the average consumer.
Advantages of wholesale trade
Despite the impressive volumes, trading wholesale from a warehouse is much easier than retail. There is no need for time-consuming advertising or other marketing expenses that can retain the buyer. Sales volumes can be stable, or the product can be sold individually - it all depends on the goals of the seller himself. In any case, with proper quality and good demand, the shipment and purchase of large quantities of goods will be carried out constantly.
What else differs is in the features of paying taxes. Wholesale trade enterprises may fall under both the general and simplified tax systems (OSN or simplified tax system, respectively). But in general, tax principles for wholesalers are much simpler than in retail trade.
The worst nightmare of any retailer is a customer who is dissatisfied with the quality of the product or the service provided. The situation can be very unpleasant, even leading to hysterics and court proceedings. Wholesale buyers do not behave this way, because they have an agreement in their hands, and in it there are clearly defined conditions and regulations for the behavior of the parties in the event of a conflict.
Retail sales
Speaking about what wholesale and retail are, one main difference can be noted: if during wholesale sales a product can go through several stages of resale, then during retail sales this situation is excluded. The product is not intended for further resale, but for direct use by the consumer.
Buyers themselves create demand for a particular product and dictate the needs of the market. Retailers are the category that has the best opportunity to study and analyze this demand and build their activities in accordance with it.
Where and how are goods sold at retail?
There are plenty of options here. The sale of goods and the provision of services can be carried out both in the store and on the street, as well as at the buyer’s home. The methods are also different: by mail, via the Internet, in personal sales or by telephone.
The seller in the retail sales system contacts directly with the buyer. That is, he has to take into account the tastes of each consumer, please him and facilitate the purchase in every possible way. And in case of conflict situations, deal with complaints.
There are also a lot of risks for a retailer. For example, you have to have poorly selling goods on the shelf - thus, buyers get the impression of a wide range and potential choice. On the other hand, there is a risk of damage to goods that were not sold on time. In addition, you have to make financial concessions: for example, selling a product at a low price, often at cost, so that the buyer purchases other products.
However, all this also has a downside - after all, the markup on retail goods is much higher than on wholesale ones. This means that the profit from such sales will be much greater.
Requirements and sales features
It is not enough to understand what wholesale is and what retail is - you need to analyze all the key features of these types of sales and understand what problems you may encounter in the process of this activity.
Differences
What are the differences between wholesale and retail?
- Various assortment. A retailer works with a small assortment from a specific supplier, a wholesaler works with a wide assortment from different suppliers. The average wholesaler has from 5,000 items in the assortment matrix. What is small wholesale? This is when the assortment ranges from 100 to 1000 items, depending on the specifics of the product itself.
- Various volumes. Wholesalers have to deal only with large volumes and wholesale prices. In addition to tangible profits, this entails more serious financial investments at the initial stage, as well as larger problems in case of failure.
- Various logistics. This area is the most “problematic” for a wholesaler, because he has to face many difficulties for each type of product: storage, availability, customs clearance, personnel. When it comes to seasonal products, things get even more complicated.
- Various turnover. If we are talking about gigantic volumes, but at the same time low turnover, the wholesaler must have a huge warehouse to store his goods. In general, everything is simple here: the faster the turnover of goods, the higher and more stable the profit. Any delays here are fraught with a negative impact - for example, due to the costs of storage, accounting, wages for warehouse personnel, etc.
- Various planning criteria. In the field of wholesale purchasing, the seller deals not only with large profits and serious product flows, but also with a large financial leverage. It is important to calculate, with maximum guarantee, the volume of future sales, to be sure that the product will be sold within a certain period of time, and also to have a guaranteed profit for the purchase of new goods.
Problems in retail and wholesale trade
Nothing is perfect, and both retailers and wholesalers face challenges. However, wholesalers have to bear more serious losses. With what it can be connected?
- There is no trust from creditors, and therefore no opportunity to get leverage. There may be problems with payment for the previous batch of goods or the purchase of the next one.
- Incompetent planning, as a result of which surplus goods accumulate, lying in the warehouse as “dead weight”.
- Unstable work with retailers. This could be either a sudden increase in the volume of their work, or a cessation of activity or a decision to completely change the range. In any case, this is not very pleasant - after all, the wholesaler has planned certain volumes and will suffer serious losses if they are not sold.
- Supply disruptions. It happens that goods purchased at a wholesale price are not ready in full. Or there were problems with its shipment at customs. Or force majeure occurred during the transportation stage. The consequences of all these troubles affect a wide range of clients. In retail sales, such situations also happen, but they are not as large-scale.
- Human factor. We are all human, and everyone can make a mistake. For example, by ordering the wrong item from the catalog or by doing worse, when the customer is dealt with incorrectly, as a result of which he goes to a competitor. All this must be strictly monitored in order to avoid serious budget problems.
Summing up
We figured out what wholesale is and what retail is. It is also clear what problems can be encountered in each type of activity. The advantages of each type of sales are also obvious. On the other hand, where the fine line lies between wholesale and retail is a purely individual criterion. For wholesale purchases, the minimum amount can be determined on a case-by-case basis by the seller - be it ten or a thousand items.
In general, we can say that trading wholesale is easier, since the terms of trade are regulated by an agreement. But you can earn more at the retail markup.
Retail(retail, English retail) - sale of goods to the final consumer (individual). Moreover, it does not matter at all how exactly goods or services are sold (by personal sale, by mail, by telephone or through a vending machine), and also where exactly they are sold (in a store, on the street or at the consumer’s home).
Unlike wholesale trade, goods purchased in the retail trade system are not subject to further resale (according to current legislation, paragraph 1 of Article 492 of the Civil Code of the Russian Federation), but are intended for direct use.
The relationship between the seller and the buyer in the retail system is usually regulated by a special law. In the Russian Federation this is the Law on Protection of Consumer Rights.
Federal Law dated December 28, 2009 N 381-FZ (as amended on December 23, 2010) “On the fundamentals of state regulation of trade activities in the Russian Federation” (adopted by the State Duma of the Federal Assembly of the Russian Federation on December 18, 2009) introduces the following definition of retail trade:
"...3) retail trade - a type of trading activity associated with the acquisition and sale of goods for use for personal, family, household and other purposes not related to business activities;..."
The subjects of the retail trade process are the seller and the buyer. Retail trade includes the sale of goods through vending machines.
There is a concept of a retail store format. This is a set of characteristics inherent in any type of store. These characteristics are:
Sales area
Number of product items
Customer service level
Product placement technology
Wholesale trade uses supply contracts, retail trade uses retail purchase and sale contracts. Thus, the main difference between wholesale and retail is the purpose of the purchase. The definition of wholesale or retail does not depend on the type of payment and the quantity of goods sold. However, you are not required to set a purchase goal either at the time of sale or after it.
If a person comes to you without documents, then he can purchase goods only for personal use, since entrepreneurial activity without registration is prohibited. Therefore, it will be retail.
If a person comes to you and shows you a certificate of registration as a legal entity, it means that the goods are not being purchased for personal use. It will be wholesale.
If a person comes to you and shows you a power of attorney from a legal entity, it means that the goods are not being purchased for personal use. It will be wholesale.
Wholesale- trade in consignments of goods. Most often, goods purchased from a wholesaler are intended for subsequent resale. But it is also not uncommon for large consumers of goods to act as buyers. Wholesale trade is an intermediary between the manufacturer and retail trade. Participates in accelerating the movement of goods, synchronizing production and consumption.
In other words: wholesale trade (wholesale) is trade between organizations, organizations and entrepreneurs, entrepreneurs and entrepreneurs. That is, this is trade when a product is sold not for final use, but for business needs (for resale or for use in production). However, it is worth noting that when a wholesale seller (legal entity or entrepreneur) sells a product to a wholesale buyer (entrepreneur or organization), the wholesale seller cannot know exactly what the product will be used for. For example, a budget library buys a notebook - this notebook can be used both for resale, if the library has a retail outlet (that is, used for business activities), and for final consumption - for example, issued to a librarian. Libraries are institutions that are a priori not created for profit; they are simply allowed to conduct business if there is a desire and opportunity. If the notebook is given to the librarian, then this is final consumption, and the transaction of selling the notebook was not a wholesale trade.
Whatever definitions for the concept of “trade” are published in “smart books”, in essence it is always the exchange of some goods for money or a corresponding amount of other goods in order to obtain a profit. Today it is both an independent branch of the economy, which ensures the movement of goods from producer to consumer, and a type of economic activity that represents an intermediary service and includes a number of related processes, such as direct customer service, delivery of goods, their storage and preparation for sale, etc. But, most importantly, trade is, on the one hand, a significant source of tax revenue, and on the other, an important social and political factor, which means that government attention to this area is inevitable and tangible. Especially in our country.
Russia, having gone through a difficult path from respected merchants of the 1st (richest), 2nd and 3rd guilds, through workers of Soviet trade who had a special position in the era of socialist shortages, speculators and traders despised by all, to spontaneous “shuttle traders”, finally came in our time to a more or less civilized market. However, the legislation in this area is still so imperfect that a seemingly simple question - how wholesale trade differs from retail trade - can make even an experienced accountant “spread out of his mind.”
From the point of view of simple common sense, wholesale- this is trade in consignments of goods, and retail - accordingly, the sale of goods individually. From here it naturally follows that the wholesaler is an intermediary between the manufacturer and the retailer, and retail, in turn, serves the demand of the end consumer. Thus, retail prices are formed from purchase prices set by the manufacturer, plus trade margins. In all civilized countries this is the approach. In Russia, it also underlies pricing and the “philosophy” of trade, but with significant legislative variations.
They relate mainly to the civil law sphere and, naturally, to taxation. Retail regulated by Article 492 of the Civil Code of the Russian Federation “Retail purchase and sale agreement”. It states, in particular: “Under a retail purchase and sale agreement, the seller engaged in business activities of selling goods at retail undertakes to transfer to the buyer goods intended for personal, family, home or other use not related to business activities.” The definition of wholesale trade was found in Art. 2 of the Federal Law of December 28, 2009 N 381-FZ: “Wholesale trade is a type of trading activity associated with the acquisition and sale of goods for use in business activities (including resale) or for other purposes not related to personal, family , home and other similar uses." Hence the determining role of such a concept as “the purpose of purchasing a product” arises, and its quantity is not taken into account at all. If a private individual purchases an entire batch of any product for personal use, such an operation will be considered retail! If the product is purchased by a legal entity to support its activities, then the sale of even one ballpoint pen from the point of view of Russian legislation will be a wholesale transaction.
Accordingly, the design of such sales is different. For retail sales, a cash receipt or sales receipt is sufficient. For wholesale, delivery contracts, invoices, cash receipt orders, etc. are required. Considering that clarifying the purpose of purchasing goods is not the responsibility of the seller, it turns out that in Russia all trade transactions with individuals are retail, and with entrepreneurs or legal entities - wholesale. And this has nothing to do with the quantity of goods purchased!
Tax legislation has gone even further. When registering an enterprise, the application must indicate the types of economic activities that the organization or entrepreneur will engage in. The All-Russian Classifier of Types of Economic Activities (OKVED) describes in detail all possible types of trade, but! - with a clear division into wholesale and retail. A manufacturer that officially sells wholesale cannot sell its goods at retail - this will be considered a violation and is fraught with a fine. A retail trade enterprise located, for example, on UTII loses its right to imputed tax for wholesale transactions, since this special regime applies only to activities related to retail. Of course, it is not prohibited to indicate both types of classification, but this will complicate accounting, reporting and taxation.
However, market relations dictate their own laws, and in the sphere of pricing, factors such as the purpose of purchasing a product or the execution of a transaction, as well as the status of the buyer, do not have any influence on the result. The manufacturer sells goods at certain prices based solely on considerations of its profit, as well as the volume and frequency of purchases of products by a specific buyer. The more often and more a partner buys, the more profitable contracts are concluded with him, and he can count on a larger discount. In retail, it is similar - regular or large customers are offered lower prices, discount cards and other bonuses almost everywhere, designed to attract and retain customers. Trade is trade - price is price, and it’s called wholesale or retail, it’s only important to the fiscal authorities!
There are two types of trade: wholesale and retail. The organization of warehouse and accounting, including the procedure for posting goods, determining selling (selling) prices, registering the release of goods to third parties, etc., depends on the type of trade carried out by the enterprise.
To define the concepts of wholesale and retail trade, let us turn to GOST R 51303-99.
Wholesale trade is the trade of goods with their subsequent resale or professional use. A wholesale trade enterprise carries out the purchase and sale of goods for the purpose of their subsequent resale, and also provides services for organizing the wholesale circulation of goods.
Retail trade is the trade in goods and the provision of services to customers for personal, family, and home use not related to business activities.
A retail trade enterprise carries out the purchase and sale of goods, performance of work and provision of services to customers for their personal, family, and home use. To conduct business, retail trade enterprises use shops, pavilions, kiosks and tents.
Retail trade enterprises are classified according to the range of goods sold by type: universal, specialized
ny stores, stores with a combined and mixed assortment of goods.
The type of retail trade enterprise is determined by its retail space and forms of sales service to customers. Types of retail establishments are: department store, department store, fabric store, grocery store, etc.
Depending on the characteristics of trade services to customers, the availability of retail premises and equipment, the following types of retail trade are distinguished: trade through a stationary retail chain; trade through a mobile (delivery and distribution) trading network; trade in forwarding ordered goods.
A summary classification of retail chain facilities is presented in the following table:
Retail trade is carried out in various forms, among which are the following: sale of goods with customer service at a retail facility (at the place where goods are sold); sale of goods based on samples; sale of goods by order and at customers’ homes; sale of durable goods on credit.
Sale of goods with customer service at the point of sale
goods, as well as for orders and at home, is regulated by the “Rules for the sale of certain types of goods”, approved by Decree of the Government of the Russian Federation of January 19, 1998 No. 55 (hereinafter referred to as the Rules), and the rules for the operation of retail trade organizations in the territories of the constituent entities
of the Russian Federation, adopted by the executive bodies of these subjects.
Trade in alcoholic products is regulated by the Federal Law “On state regulation of the production and turnover of ethyl alcohol, alcoholic and alcohol-containing products” dated November 22, 1995 No. 171-FZ and the above-mentioned Rules.
Similarly, the sale of civilian and service (if their buyers are citizens entitled to service weapons) cold steel and firearms, their main parts (barrel, bolt, drum, frame, receiver), as well as cartridges for them, is carried out in accordance with Federal Law dated December 13, 1996 No. 150-FZ “On Weapons” and the Rules.
When selling goods in consignment stores, you should be guided by the “Rules for commission trade in non-food products”, approved by Decree of the Government of the Russian Federation of June 6, 1998 No. 569.
The sale of goods based on samples is regulated by Article 497 of the Civil Code of the Russian Federation, Article 26.1 of the Law of the Russian Federation dated 02/07/1992 No. 2300-1 “On the Protection of Consumer Rights” and “Rules for the sale of goods based on samples”, approved by Decree of the Government of the Russian Federation dated July 21, 1997 No. 918.
The approximate rules of trade in the wholesale food market were approved by joint order dated December 1, 1994 of the Ministry of Agriculture and Food of the Russian Federation No. 292 and Roskomtorg No. 95. Trading network
A trading network is a set of trading enterprises located within a specific territory or under common management.
A trading enterprise is a property complex used by an organization for the purchase and sale of goods and the provision of trade services.
The wholesale (trade) network is represented by wholesale trade enterprises.
The retail (trading) network is represented by retail trade enterprises.
More on the topic Wholesale and retail trade:
- Agafonova Marina Nikolaevna. Accounting in wholesale and retail trade and document flow, 2009
- ORGANIZATIONAL FORMS OF WHOLESALE TRADE 1.8.1. The essence and objectives of wholesale trade
- The timing, organization and procedure for conducting inventory in wholesale and retail trade organizations, its documentation, the procedure for reflecting inventory results in accounting.
9.4 Retail and wholesale trade
Retail - any activity of selling goods or services directly to end consumers for their personal, non-commercial use.
Types of retail businesses . Self-service retailers provide buyers with the opportunity to independently select goods; they are the basis for organizing trade at low prices. Retail trade enterprises with free selection of goods have vendors you can contact for assistance. The customer completes the transaction by approaching the seller and paying for the purchase. The costs in this case are slightly higher than with self-service. Retail trade enterprises limited service provide the buyer with a higher level of assistance from sales personnel. In such stores, customers are provided with more information and offered services in the form of sales on credit. Full service retailers- These are fashionable department stores, their salespeople help the buyer in the process of searching, comparing and selecting goods. Wealthy consumers prefer such stores due to well-trained staff, a wide range of specialty goods and fashion items, a variety of lending schemes, delivery of purchases, etc.
The proposed product range can serve to classify retail establishments. Specialty stores offer a variety of narrow range products. Examples include clothing stores, sporting goods stores, furniture stores, flower shops and book stores. Department stores They offer several product groups - usually clothing, household items, and household goods. Each assortment group is handled by a special department of the department store. Supermarkets- These are large self-service enterprises with low costs and markups, and large sales volumes. They are designed to fully satisfy the consumer's needs for food, and sometimes laundry, detergents and home care products. Packaging technology makes it possible to offer consumers products in containers and packaging that are convenient for storage. The use of electronics and computers ensures automation of accounting and control. Retail service enterprises- these are hotels, banks and airlines; colleges, hospitals, cinemas and restaurants; repair services and establishments providing personal services (hairdressers, beauty salons, etc.). The number of service retailers is growing faster than the number of goods retailers.
Prices. The classification of trading enterprises can be carried out on the basis of price levels. Low prices are typical for the following stores. Discount stores trade at low prices due to small markups with large sales volumes. The use of discount prices and the sale of low-quality goods are not typical for a discount store. Such a store sells high-quality goods at low prices with a high inventory turnover. The inventory turnover there reaches up to 15 times a year, and not 5-7 times, as in department stores. Warehouse store is a trading enterprise with a limited scope of services, the purpose of which is to sell a large volume of goods at low prices. Traditional furniture stores have long used the practice of selling directly from stock. Stores - showrooms They sell jewelry, computers, power tools, household appliances and other goods based on price lists and catalogs. The visitor in the demonstration department makes his choice and gives the order to the seller.
The nature of the retail space . Although most goods and services are still sold in stores, non-store retailing is growing rapidly. Some forms of non-store retailing can be listed. Retail trade with ordering goods by mail, by telephone or via the Internet- This is a sales activity using mail and telephone lines, a global computer network to collect orders, facilitate the delivery of goods, and make payments. At trade with ordering from a catalog Sellers usually send catalogs to a specific circle of customers or provide the opportunity to receive them at their retail premises for free or at a low price. Direct Marketing involves advertisements in newspapers, radio, or television describing a product that consumers can order by mail or telephone. This is how they sell books, household appliances, etc.
Through vending machines They sell a wide variety of goods: cigarettes, soft drinks, candy, newspapers, hot drinks. Vending machines provide 24/7 sales and self-service options. Discount order service assists selected groups of clients - usually workers and employees of large organizations, such as government agencies, who make purchases at discounted prices from a number of selected retailers. Peddling trade dates back many centuries ago. Currently, many enterprises and entrepreneurs are engaged in peddling trade on the “every door” principle.
Store affiliation . Retail establishments can be classified according to their ownership. Most stores are independent private businesses. There are also other forms of ownership. Corporate network- two or more commercial establishments under common ownership or control. They sell products of a similar range and have a common purchasing and sales service. The success of corporate networks is based on cost advantages due to increased sales volume and reduced markups. The size of corporate networks allows you to purchase large quantities of goods, receiving maximum discounts. They are able to create effective structures, hire qualified managers and apply special techniques for sales forecasting, inventory management, pricing and sales promotion, and combine the functions of wholesale and retail trade.
Type of store concentration . This is the final principle for classifying retail establishments. There are four main types of concentration forms: 1) central business district. Every major city has a central business district, home to department stores, specialty stores, banks, and movie theaters. Closer to the outskirts are smaller business districts; 2) regional shopping centers- a group of trading enterprises corresponding in their location, size and type of stores to the trading area they serve. Large shopping areas may contain several department stores; 3) district shopping centers may include dozens of stores serving up to 100 thousand people who live in the area; 4) neighborhood shopping centers, serving 5-20 thousand residents. These are centers for the sale of everyday goods.
Wholesale - any activity involving the sale of goods or services to those who purchase them for resale or professional use. Wholesalers are divided into the following groups: a) wholesalers-merchants; b) brokers and agents; c) wholesale branches and manufacturers' offices.
Functions of wholesalers. Wholesalers are used when they can be used to more effectively perform the following functions: 1) sales and its promotion- wholesalers help the manufacturer reach many small customers at relatively low costs; 2) procurement and formation of product range- the wholesaler is able to select products and create the product range necessary for the client; 3) breaking down large quantities of goods into small ones- wholesalers provide savings by purchasing goods by the wagonload and dividing them into small lots; 4) storage- wholesalers store inventory, thereby helping to reduce related costs for suppliers and consumers; 5) transportation- wholesalers provide faster delivery of goods, since they are closer to customers than manufacturers; 6) financing- wholesalers finance their clients by providing them with trade credit; 7) risk taking- by accepting ownership of the goods, incurring costs in connection with its theft, damage, deterioration and obsolescence, wholesalers take on part of the risk; 8) providing market information- wholesalers provide their suppliers and clients with information about the activities of competitors, new products, and price dynamics; 9) management and consulting services- a wholesaler often helps retailers by training their sellers, participating in the organization of work, helping to organize accounting and inventory management.
Wholesalers-merchants. They are independent business enterprises that acquire ownership of all goods they deal with. In different fields of activity they are called differently: wholesale companies, bases, distributors, trading houses. This is a large group of wholesalers, accounting for more than half of the wholesale trade. There are two types of merchant wholesalers - full-service and limited-service. Full service wholesalers provide services such as storing inventory, providing vendors, lending, ensuring product delivery, and providing management assistance. These are either wholesalers or distributors. Wholesale trade mainly with retailers, providing them with a full range of services. Distributors of industrial products sell primarily to manufacturers rather than retailers. They offer services to customers such as inventory storage, lending and delivery of goods.
Limited Service Wholesalers provide their suppliers and clients with far fewer services. There are several types of wholesale enterprises with a limited range of services: a) wholesaler selling for cash and without delivery of goods, - deals with a limited range of popular goods, which he sells to small retailers with immediate payment for the purchase without exporting the purchased goods; b) wholesaler-traveling salesman - not only sells, but also delivers goods to customers; V) wholesaler-organizer - works in industries characterized by bulk transportation of goods (such as raw materials, heavy equipment), while he does not deal with the goods directly, but, having received an order, finds a manufacturer who ships the goods to the buyer; d) o wholesaler-exporter- serves retail stores, sending goods to the store, sets up displays in the sales area, sets prices, keeps track of inventory and issues invoices to retailers for what is purchased; d) wholesaler-messenger - distributes catalogs to clients (retail trade enterprises, industrial production and various types of institutions), orders are sent by mail or delivered by road.
Brokers and agents . They differ from merchant wholesalers in two respects: they do not take ownership of the goods and perform limited functions. Their main function is to facilitate buying and selling. For their services they receive a commission of up to 5-10% of the sale price of the goods. Like merchant wholesalers, they specialize either in the type of product they offer or in the type of customers they serve. A broker matches buyers with sellers and helps them come to an agreement. The broker is paid by the one who engages him in mediation.
An agent represents a buyer or seller on a longer-term basis. There are several types of agents. Manufacturers' agents represent two or more manufacturers of complementary goods. They enter into formal agreements with each manufacturer regarding prices, territorial boundaries of activity, order processing, delivery services and commission rates. Authorized sales agents enter into contracts with manufacturers, obtaining rights to sell products produced by one or another manufacturer. The authorized sales agent serves as the manufacturer's sales department and has a significant influence on prices, terms and conditions of sale. Purchasing agents usually form long-term relationships with their customers and purchase the necessary goods for them, often receiving these goods, checking their quality, organizing warehousing and subsequent delivery to their destination. Wholesalers-commission agents- These are agent firms that take physical possession of goods and independently enter into transactions for their sale. As a rule, they do not work on the basis of long-term agreements. A commission wholesaler delivers goods to a specific market, sells the entire lot at the most favorable price, deducts its commissions and expenses from the proceeds and transfers the remaining amount to the manufacturer.
Wholesale branches and manufacturers' offices . These enterprises carry out wholesale trade without the involvement of independent wholesalers. There are two types of enterprises engaged in such activities: 1) sales departments and manufacturers' offices - maintain tighter control over inventory management, sales and promotion activities. Large retailers often maintain their own purchasing offices in major market centers. The purchasing office plays approximately the same role as brokers or agents, but is a structural unit of the purchasing organization; 2) specialized wholesalers - A number of economic sectors have their own specialized wholesale organizations (for example, wholesale oil depots sell and deliver petroleum products to gas stations and business enterprises).
Wholesaler Marketing Solutions . Wholesalers must make a number of marketing decisions.
Deciding on the target market . Wholesalers need to identify their target market. The wholesaler can select a target group of customers based on size, type, intensity of interest in services and based on other criteria. Within the target group, the wholesaler can identify the most profitable customers and establish closer relationships with them.
Decision on product range and range of services . The “product” of a wholesaler is the assortment he offers. Wholesalers are under pressure from the market to offer a full range of products and maintain stocks of goods for immediate delivery. But this comes at a cost. Wholesalers determine the number of assortment groups of goods, select only the most profitable product groups for themselves, and decide which services help achieve the closest relationships with customers.
Pricing decisionsshould be determined on the basis of marketing approaches, taking into account that in a competitive environment the net profit of wholesale trade may not reach 2%.
Deciding on Incentive Methods includes the choice of a combination of the main elements of the incentive complex. Many wholesalers do not yet think much about promotion, so the use of advertising, sales promotion, publicity and personal selling techniques is often ad hoc.
Deciding on the location of the enterprise . Wholesalers typically locate their businesses in areas with low rents and low taxes, spending minimal
funds for landscaping and equipment of premises. To combat rising costs, they are developing new methods and techniques. One of these developments was the creation of automated warehouses controlled by computers.
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