DEMO

WHOLESALE TRADE

Introduction

  • 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

manufacturer wholesaler retailer consumer

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.
  • Convenience
  • 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.

Warehouses

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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.

Marketing boards

  • 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:
1. Privatization
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.
2. Commercialization
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.
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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.
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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.

Grading selling

  • 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.

Auctions

  • 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.