Wholesale trade deals with the bulk buying of goods from various manufacturers and the breaking down of this bulk into smaller quantities which is then sold to the retailer.
A wholesaler therefore is the middlemen distributer.
The channel of distribution
Functions of a wholesaler
To the manufacturer
To the retailers
To the consumers
Due to the purchase of goods in bulk, production lines are cleared.
Varieties of goods are provided from different manufacturers.
Offer a variety of goods
Transportation of goods is done by wholesalers.
They provide goods in credit.
Customer demand is met
Take risks meaning the producers are relieved of risks.
They provide transport to deliver goods to the retailers.
Price fluctuations are minimized
They give useful information to the manufacturers on what consumers feel about their products.
Breaking bulk help to reduce storage needs by the retailers.
Continuous availability of products.
They sometimes help with advertising the manufacturer’s products.
Producers are relieved of storage of products.
Types of wholesalers
Wholesalers are classified in two ways namely:
According to the range of products they deal in for example:
General wholesalers-these sell a variety of goods.
Specialist wholesalers-these sell a limited or even just one line of goods.
According to the geographical distribution of their branches for example:
Regional wholesalers-these are only found in one region in a country.
National wholesalers-these are found in most parts of the country.
Reasons why wholesalers are eliminated.
Many wholesalers have decided to carry out their own retailing.
Pre-packaged and branded goods are now on demand.
Producers have decided to sell directly to the retailers.
Large retailers have decided to carry out their own wholesaling.
Large retailers can afford to buy in bulk straight from the manufacturers.
Some goods are perishable or have a short lifespan for example milk and newspapers and because of that there is no need to pass through the wholesalers as this lengthens their distribution to the customer.
Some goods are technical in nature and because of that the manufacturer has to install and service them afterwards.
What is a warehouse?
It is a large building where raw materials or manufactured goods may be stored being distributed for sale.
The importance of warehousing
It provides storage for raw materials, work in progress, finished goods, equipment and spares.
Seasonal goods are stored and this allows people to buy them off season.
It prevents the shortages or an oversupply of goods in the market.
It protects goods from bad weather conditions for example rain.
Storage of goods in a warehouse allows them to mature for example wine.
It also allows bulk purchasing by manufacturers, wholesalers or large scale retailers.
They help to store goods in transit since they are often found in airports or railway terminals.
These are set through the Act of parliament in order to ensure the orderly marketing of essential products.
In Zimbabwe most marketing boards deal with agricultural produce.
Changes in marketing boards
Changes that have occurred in marketing boards over the past few years are:
What is privatization?
Transfer of ownership from the public to private sector.
Transfer of management of an enterprise from the public to private sector.
Withdrawal of the state from an industry or sector ,PARTIALLY OR FULLY.
Due to privatization marketing boards are now owned by shareholders meaning they are now operating as public limited companies.
What is commercialization?
It is defined as the process of driving technology or idea into the market.
Due to commercialization marketing boards now have got a greater say in the way they are managed and are no longer controlled by the government.
They now operate to make profit and no longer rely on the government subsidies.
They now charge the products of goods and introduce new production methods.
Reasons for commercializing and Privatization
Increases government’s tax base as public and private companies pay tax.
Relives pressure for the government.
Increased efficiency on the production of goods.
It promotes competition which leads to price reduction.
More disciplined and highly skilled labour force is hired.
New technologies and production methods are introduced leading to innovation.
Operating at a profit objective gives the marketing board to set prices and this means they will no longer rely on the government for finance.
Dairiboard Zimbabwe Limited (DZL)
It was called the Dairy Marketing Board before it changed its name.
It was the first marketing board to be privatized
Activities of the (DZL)
It buys milk from farmers and processes it to various products for example yogurts.
It also markets its products locally and abroad.
It promotes the consumption of milk and milk products through advertising.
Provides safe storage of milk and milk products.
It is in charge of packaging and branding of the milk and milk products.
It also has a social responsibility for example sponsoring national sporting events.
It also set prices of the milk and milk products and hire employees.
It is responsible for the research and development of milk and milk products.
The cotton company of Zimbabwe (cottco)
before it changed , its name was called the Cotton Marketing Board.
it was both privatized and commercialized
Activities of COTTCO
it buys cotton from farmers
it provides cotton farming inputs to farmers at the beginning of the planting season for example seeds
it conducts research on cotton farming,for example on the type of soil suitable for growing cotton plant
it also sets deadline for the destruction of the crop after the end of the harvesting season
it also runs ginneries in the cotton growing areas for example in Gokwe.
it provides credit scheme to farmers
The cold storage company (csc)
It was called to be called the Cold Storage Commission before it changed its name.
It was commercialized.
Activities of the cold storage company (csc)
It buys and slaughter livestock such as cattle, goats and sheep.
It inspects meat and puts its stamp.
It stores meat and other meat products safe.
It suppliers meat to butcheries at wholesale prices.
It pre-packages meat and sells it in its retail outlets.
It processes meat products for example canned beef.
It also keeps cattle in its own ranches and feed lots to ensure continued supply of beef.
It also conducts cattle auctions in rural areas or resettlement areas.
The grain marketing board(GMB)
It was commercialized only but the government is not willing to privatize it.
The GMB is very importance as it ensures that there are no food shortages in the country in terms of maize our staple food.
Activities of the GMB
It buys a range of cereal crops for example maize, rice, sorghum, sugar beans among others from farmers.
It also provides large silos for storing maize in many parts of the country.
It also sells grains to millers who in turn process them into variety of products.
It also process grains into end products and sell them in its silo brand.
It also sells farming inputs to farmers for example fertilizers and seeds to farmers.
It imports grains from other countries in cases of drought in the country.
The mineral marketing board of Zimbabwe (mmz)
It deals with trade in minerals.
Activities of the MMZ
It buys minerals from all producers and markets them to external buyers.
Controls the selling of minerals within the country.
It controls the forex earnings from mineral trade.
It negotiates terms with foreign buyers on behalf of the producer.
It arranges transport, storage and handling of minerals when they are sold to outside markets.
Other methods of selling
Wholesale produce markets
These markets sell perishable agricultural produce for example fruits and vegetables.
These markets enable to see and choose goods they want.
Examples include Mbare in Harare and Willsgrove in Bulawayo.
Some commodities are put into grades and sold by those grades.
Each grade has certain qualities and sold in different prices
For example maize can be graded as A, B, or C.
Some goods are sold in public auctions for example vehicles, motor vehicles and household equipment.
The items being sold to a buyer who offers the best prices.
Examples of licensed auctioneers are Hammer and Tongue’s.