Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

13. Retailers, Wholesalers
    and Their Strategy
    Planning

Text © The McGraw−Hill

Companies, 2002

Retailers, Wholesalers, and Their Strategy Planning 381

3M produces 1,600 products that

are used by auto body repair

shops in the U.S., Europe,

Japan, and other countries. To

reach this target market, 3M

works with hundreds of specialty

wholesalers.

Limited-function

wholesalers provide

some functions

Cash-and-carry

wholesalers want cash

Drop-shippers do not

handle the products

Truck wholesalers

deliver—at a cost

with mass-merchandisers. But in general, many consumer-products wholesalers have

been hit hard by the growth of retail chains that set up their own distribution cen-

ters and deal directly with producers.

A specialty wholesaler of business products might limit itself to fields requir-

ing special technical knowledge or service. Richardson Electronics is an

interesting example. It specializes in distributing replacement parts, such as elec-

tron tubes, for old equipment that many manufacturers still use on the factory

floor. Richardson describes itself as “on the trailing edge of technology,” but its

unique products, expertise, and service are valuable to its target customers. Many

of its customers operate in countries where new technologies are not yet com-

mon, but Richardson gives them easy access to information from its website

(www.rell.com) and makes its products available quickly by stocking them in

locations around the world.^32

Limited-function wholesalersprovide only somewholesaling functions. In the fol-

lowing paragraphs, we briefly discuss the main features of these wholesalers.

Although less numerous in some countries, these wholesalers are very important for

some products.

Cash-and-carry wholesalersoperate like service wholesalers—except that the cus-

tomer must pay cash. In the U.S., big warehouse clubs have taken much of this

business. But cash-and-carry operators are common in less-developed nations where

very small retailers handle the bulk of retail transactions. Full-service wholesalers often

refuse to grant credit to small businesses that may have trouble paying their bills.

Drop-shippersown (take title to) the products they sell—but they do notactu-

ally handle, stock, or deliver them. These wholesalers are mainly involved in selling.

They get orders and pass them on to producers. Then the producer ships the order

directly to the customer. Drop-shippers commonly sell bulky products (like lumber)

for which additional handling would be expensive and possibly damaging. Drop-

shippers in the U.S. are already feeling the squeeze from buyers and sellers

connecting directly via the Internet. But the progressive ones are fighting back by

setting up their own websites and getting fees for referrals.

Truck wholesalersspecialize in delivering products that they stock in their own

trucks. By handling perishable products in general demand—tobacco, candy, potato

chips, and salad dressings—truck wholesalers may provide almost the same func-

tions as full-service wholesalers. Their big advantage is that they promptly deliver