Chapter 10: Wholesaling and Product Movement

Chapter Summary:

In this chapter, we first examine another reselling group – wholesalers – and see how they come into play when a marketer attempts to reach the final customer. We show wholesalers exist in many formats, affect a wide range of industries, and offer different sets of features and benefits depending on the markets they serve. In the second half of the chapter, we examine the tasks that must be carried out in order to physically move products to customers. In some cases, the marketer will take on the responsibility of carrying out some functions, while other tasks may be assigned to distribution service providers. Whether handled by the marketer or contracted to others, these functions are crucial to having a cost-effective and efficient distribution system. It is worth noting that while most product movement is concerned with moving tangible products, some of the issues covered here are also applicable to intangible products, such as services, and to digital products.

Key Issues:

  • What is Wholesaling?
  • Benefits of Wholesalers
  • Ways to Categorize Wholesalers
  • Wholesale Formats
  • Managing Product Movement
  • Ordering and Inventory Management
  • Transportation
  • Product Storage

Cited References:

  1. “2017 Economic Census for Wholesale Trade.” United States Census Bureau.
  2. “Market for Electricity.” PJM.
  3. Both small general retailers (e.g., neighborhood convenience stores) and specialty retailers (e.g., clothing stores) will often purchase from a variety of wholesalers. For instance, some retailers may look to websites such as Wholesale Central, which provides information on over 1,000 wholesalers listed in over 50 product categories.
  4. In some industries, and in particular those in the business market, the tasks involved in the physical movement of products may fall under the purview of departments with names such as logistics and operations. While not directly within the marketing department, these departments coordinate closely with marketing (e.g., marketing alerts logistics of likely increase in demand due to special promotion).
  5. Paul Christ. “Patenting Marketing Methods: A Missing Topic in the Classroom.” Journal of Marketing Education. 27 (1), 2005.
  6. For more details see: “Shopping with Alexa.” Amazon.
  7. “2017 Commodity Flow Survey.” Bureau of Transportation Statistics – U.S. Department of Transportation.
  8. For insight into how unanticipated demand during the coronavirus pandemic impacted the supply of many products see: Amanda Mull. “Why Everything is Sold Out.” The Atlantic, September 15, 2020.
  9. For more on the warehouse and product distribution industry see: Modern Materials Handling.
  10. For more on Amazon fulfillment centers and the location of these facilities see: List of Amazon Locations. Wikipedia.
  11. For details on how robots operate in a warehouse setting see: Will Allen. “Guide to Warehouse Robots: Types of Warehouse Robots, Uses, Navigation & More.” 6 Rivers Systems, October 19, 2020.