Wholesaling SLA - Retail mix rule wholesale

Wholesale SLA

1. Wholesaling
Chapter 15 with Duane
Weaver

2. Sector Overview
Wholesaler-Distributor (W-D)
W-D role in supply chain
Growth and Influence of W-Ds

3. Essential tasks of Independent
Wholesaler-Distributor
Tend to manage all 8 generic flows
passing information and such, both
downstream and upstream
Three great challenges of wholesaling:
1.Doing the job correctly (without errors)
2.Doing the job effectively (maximum service)
3.Doing the job efficiently (low costs)

4. Innovative Value in Wholesaling
Stock the right items in the right volume…act as an
inventory extension of the retailer
Organize Federations of business –process designed in
advance
Wholesale-led –growth in consortium relationships (alliances,
holding companies, or divisions)
Integrated Supply –Exclusive wholesaler (or wholesale group) in
exchange for high stock levels, and product mix and service
levels.
Manufacturer-led –Create their own wholesale-distributor
solutions (e.g.: Volvo bulk warehouse in U.S. near FedEx,
Memphis, Tennessee)

5. Voluntary and Cooperative Groups
Wholesaler Voluntary Group –wholesaler bands together retailers
voluntarily to be able to provide more economical service (via economies of
scale and/or similar of market characteristics). E.g.: IGA. See values on p. 488,
table 15.2.
Standardized operating procedures
Common logos
Structured marketing agreements
Alternative Federations Downstream –same idea as above but initiated by
retailers…CO-OP.
Members (retailers) buy shares and become owners of the Cooperative
Wholesaler.
Results in strong congruencies that lead to economies of scale in wholesaling.
Have a more formalized structure and are better able to influence the marketing
efforts of the retailers (owner-members) than in the wholesaler voluntary group.

6. CONSOLIDATION Trend
Increase in retailer size pressures wholesalers to
consolidate to obtain related efficiencies
Huge Wholesalers with much growth via acquisition
Drives manufacturer consolidation
Wholesale winners of consolidation:
1.Catalyst firms (rapid acquisitions)
2.Late entrants with defensible niches (after consolidations)
3.Extreme specialists
4.Extreme generalists, large and versatile

7. Future of Wholesaler-Distributors
International Expansion
Reduced cross border shipping costs
Lower trade barriers (NAFTA, EEC)
Fundamentals of wholesaling precludes most from becoming international
(wholesaling tends to maintain economies of scale by “meeting the needs of a
local market”)
E-Commerce –four wholesaler challenges:
1.Broader aggregated geography of markets
2.Pricing widely available
3.Distribution segregated from other service outputs such as customer
service (now wholesaler can specialize in a function and outsource
more?)
4.Information functions can be 3
rd
party internet-based institutions
E-business models
1.Independent Exchanges (consolidate buying with online catalogue)
2.Supply Chain Networks (internet based integrated supply..EDI software
driven expertise)
On-line retailers impact
driving growth of larger wholesalers due to “drop ship model”, e.g.:
Amazon.com

8. Vertical Integration in Wholesaling
Trend of HUGE “Power Retailers” to
bypass independent wholesaler-
distributors. Two types:
1.General-merchandise power retailers (Wal-
mart, Kmart, Costco…)
2.Category-dominant power retailers (category
killers) (Staples, Petco, Home Depot, Toys
“R” Us…)

9. Manufacturer’s Representatives vs.
Wholesaler-Distributors
MRs (manufacturer’s representatives) enable
manufacturers to have much greater control
over the market and prices than through
wholesale distributors.
Function like sales force for manufacturers
finding distribution opportunities. Never possess
product, rather negotiate and service the
transfer and sale of goods.
May still use wholesaler warehouse for inventory
management and shipping.

10. Thank You