Economics: Market: Markets based on Channels of distribution or saleable lots

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Markets Based on Channels of Distribution or Saleable Lots

Distribution channel or middlemen are set of people and firms involved in the transfer of goods from the producer to the consumer. They play an important role in physical flow of goods and also, they add utility (place, time, form and information utility) to the products. These middlemen are two types - Wholesalers and Retailers. Based on kind of distribution channel markets can be classified into two categories. Those are Wholesale markets and Retail markets.

Wholesale Markets

A wholesaler is a distributor or middleman who sells mainly to retailers and institutions, rather than consumers. And the goods are transacted in big lots.

Image of Wholesale Markets

Image of Wholesale Markets

Image of Wholesale Markets

Functions of Wholesalers

  • Selling and promoting – helps in reaching many retailers.

  • Buying and assortment building based on retailers’ interests.

  • Bulk breaking – buy in bulk quantity from producer and distribute to the retailers in small lots.

  • Warehousing – hold the inventory and reduce the inventory burden to the producer.

  • Financing – provide credit facility to retailers and also pays advances to producer.

  • Risk bearing – bear the cost of theft, damage, spoilage and obsolesce.

  • Information provider – He provides the information regarding their products and suggest improvements to the producer.

Retail Markets

Retailer is a distributor who sells the goods to the final consumer for the consumption. In retail markets, goods are sold in small lots but in different varieties. Retail consists of the sale of physical goods or merchandise from a fixed location.

Image of Retail Market

Image of Retail Market

Image of Retail Market

On the basis of marketing strategy retailers can be categorized into different kinds.

  • Specialty stores – carry narrow product lines with deep assortments.

  • Departmental stores – carry wide variety of product lines.

  • Convenience stores – carry a limited line of high turnover convenience goods.

  • Superstores – offer a large assortment of routinely purchased products.

  • Discount stores – Sell standard merchandise at lower price by accepting lower margins and selling higher volumes.

  • Factory outlets – producer operated stores.

Functions of Retailers

  • Attract the final consumer and act as an important link in distribution by providing more customer satisfaction.

  • Promote the producer’s products.

  • Also provide the information regarding product improvements.

  • Also incur lot of expenditure on decoration of offices shops and proper presentation of the commodities so that consumers are attracted towards the retail shop.

Online Market or Online Shopping

It is an innovative process whereby consumers directly buy goods or services from a seller without an intermediary service over the internet. This is also called e-Commerce (electronic commerce). This is possible because of technological advancements. This is becoming more popular in recent times. There are many advantages with online market but at the same time there are many challenges.

Advantages of Online Markets

  • Availability of service 24/7

  • More chances for better selection from many sources.

  • Time saving activity comparing to traditional transactions.

  • Payments can be done either in online mode through debit cards, credit cards, wallets and UPIs or in offline mode i.e. cash on delivery.

Challenges of online markets:

  • Must describe the products for sale with text, photos, and multimedia files with details.

  • Problems of cybercrimes.

  • Building confidence in customers is a difficult task.

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