Reasons for the elimination of wholesalers

Reasons for the elimination of the wholesaler.

• Bulk buying by large scale retail organisations such as multiple shops, hypermarkets and department stores who have:
• Adequate capital to buy on cash
• Have their own transport.
• Own their own warehouses.
• It is cheaper to buy from the producers/ manufacturers directly.
• All manufacturer’s goods are branded and are easy to sell directly to the retailers.
• To provide information on technical goods that require expert knowledge manufacturers prefer to sell directly to retailers or at times directly to consumers e.g. computers from companies such as Dell and HP.
• Goods that have a slow rate of turnover such as jewellery, airplanes, expensive cars e.t.c.
• Some manufacturers have opened their own retail shops or factory shops for example Samsung.
• The appointment of authorised dealers or official distributors who sell directly to retailers and consumers.
• Perishable goods necessitate the need to shorten the distribution chain.
• Some goods are fragile and thus require special handling which only the producer can provide and are thus sold directly to the consumer by manufacturers themselves.
• Use of tied shops.

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