Distribution. The chain of distribution. The wholesale trade

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1.Pre – reading

Pronounce the following words word combinations,give their Ukrainian equivalents:

The chain of distribution, independers wholesalers, individual retailers, to buy in bulk, to deal with the manufacturers, to make use of, to operate one’s own warehouse, smallscale producers, to bypass, to obtain orders, to collect payments, a range of goods, to make a delivery, to hold stocks, to obtain supplies, a risky undertaking, a superior product, market outlets, bulky and heavy goods, to offer after-sales services, multiple shops, to obtain discounts, catering faclities, impressive gains, mail-order firms, out-of-town warehouses, price competition, resale price maintenance, to standardise, pre-pack goods, over-the-counter shopping.



In the UK, about three million people are employed in what are described as the distributive trades.These people are employed in jobs which help to move goods from producers and consumers/

                              The chain of distribution  

1. The traditional method of distribution is for producers to supply goods in bulk to independent wholesalers, who hold stocks and distribute relatively small quantities to individual retailers.

2. There are many very large retail organisations which each own a large number of retail shops. These organisations are large enough to buy in bulk and deal directly with the manufacturers. Thay do not make use of the independent  wholesalers because they operate their own warehouses and have their own transport departments.

3. In some cases, the manufacturing, wholesale and retail stages are integrated wishin a single firms. As described in Chapter 7, breweries often sell through their own public houses, and oil companies both manufacture petrol and sell it through their own petrol stations.

4. Small-scale producers often deal directly with retailers. For example, lokal bakeries usually supply bread and cakes directly to retail shops.

5. One chain of distribution bypassesthe retail shop: mail-order firms deal directly with householders. They use local agents to obtain orders and collect payments, and the goods are supplied by post.

                                 The wholesale trade

The wholesale stage is a most important link in the chain of distribution. The wholesale helps to solve the basic problem of distribution. This problem arises because producers wish to supply in large quantities and to dispose of their goods as quickly as possible,andconsumers wish to buy small quantities of a variety of goods as and when they need them.

To overcome this problem, wholesalers provide a number of important services.

                                  1. Breaking bulk

Wholesalers buy large quantities from a variety of  producers and devide these into smaller quantities for distribution retailers. A single delivery from a wholesaler can supply a retailer with a range of goods made by different manufacturers.The existence of the wholesale stage leads to, a saving in transport costs as Figure 10.2 shows vtry clearly. Figure 10.2 ( A ) shows the number of journeys required if each manufacturer makes a delivery to each retailer, and there is no wholesale stage. Figure 10.2 ( B ) shows the number of journeys required when distribution takes place through a wholesale stage.

                                  2. Holding stocks

Consumers usually expect to be able to purchase a commodity just when they need it. To meet this kind of demand someone must be prepared to hold stocks. Most retailers do not have the space to hold large stocks, and could not afford the expence of holding them even if they had the space. By holding large stocks, wholesalers make it possible for retailers to obtain supplies when they require them. Frequent ( often daily )deliveries from wholesalers enable retailers to meet consumers’ demands without having to hold excessive stocks.

                                3. Information and advice

The wholesaler’s warehouse is an importantsource of information to retailers.They can visit  the warehouse and inspect the range og goods available, obtain advice on these goods and keep themselves informed of new developments.

                                    4. Bearing risks

The holding of large stocks can be a risky undertaking. The value of goods may fall while large stocks are being held. A change of fasion, the development of a superior product or , in some cases, deterioration may reduce the value of goods neld by the wholesaler. On the other hand, if prices rise, the value of the stocks will increase, and the wholesaler will enjoy higher profits.

                                  The Retail Trade

Retails are the last link in the chain of distribution. They provide the following services:

·  they make a variety of goods available in locations convenient to the consumer;

·  they provide with a large number of market outlets for their products;

·  they perform an important advertising function for producers by displaying goods and offering advice on them;

·  when goods are bulky and heavy, they normally offer a delivery service;

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