Sales and Distribution Management

Wholesaling : Overview

In the process of distributing the manufacturer's products to other intermediaries, wholesalers have to take several strategic decisions. A wholesaler has to decide on the target market he wishes to serve. This depends on the number and type of customers, demographic factors, etc. The wholesaler also has to take decisions pertaining to the products to offer, product positioning, place, pricing, and promotional activities.

A changing lifestyle, technology, competition, and globalization have changed the wholesaling scenario the world over. Wholesalers have evolved into big corporate organizations due to better regional coverage, customized pricing and credit policies, better service to the customers and erosion of functional boundaries.

The wholesaler has thus evolved from being an intermediary using traditional methods of distribution to one who is IT savvy. There is a critical need for organized and stored information for taking any business decision. Information sharing plays a dominant role in a distribution channel due to the number of intermediaries involved and complexity of the channel structure. Present day wholesalers are keen on using IT to meet their information and communication needs. IT has a profound impact on the way wholesalers conduct their business. The use of IT has not only hastened communication and information sharing but its role in the business processes like assortment planning, new product development, inventory replenishment, order processing, etc., has made these processes faster and efficient.

Wholesalers have overcome various limitations of the past but they still have more challenges to overcome in the near future. Some major areas of concern that can adversely affect the profitability of a wholesaler, if they are not properly planned and controlled, are inventory management, sales management, promotion management, and financial planning and management.

As elsewhere in the world, in India too, there has been a growth in the business of wholesaling. Changes in the business environment after the opening up of the economy have caused wholesalers to adapt to these changes and modify their operations. The future of wholesaling will be dominated by consolidations, and restructuring and will be strongly influenced by e-commerce and Internet technologies.

Chapter 24 : Overview