Do you think using wholesalers is the best way for a large business to distribute its products?

Distribution is a key element of the marketing mix and businesses must choose an appropriate channel to reach their target market. One option for large businesses is to use wholesalers. Wholesalers buy products in bulk from manufacturers and sell them on in smaller quantities to retailers. This essay will assess the advantages and disadvantages of using wholesalers for a large business.

A key advantage for a large business of using wholesalers is that transport costs to the retailer are paid for by the wholesaler, reducing costs to the manufacturer. For example, a drinks manufacturer such as Coca-Cola would incur significant costs transporting their goods to individual retailers across the country. By using wholesalers, this cost is no longer incurred directly by the manufacturer, leading to increased profitability. This method of distribution is also convenient as the manufacturer only needs to deal with a small number of wholesalers.

Furthermore, wholesalers buy in large quantities, which reduces distribution costs. This is because the manufacturer benefits from economies of scale and can produce and transport goods in a more cost-effective manner. For example, the manufacturer of Heinz Baked Beans benefits from lower average costs per unit when producing larger quantities. The benefit of these lower costs can then be passed on in the form of lower prices to wholesalers, making their products more competitive. This can enhance the overall efficiency of the distribution process for the large business.

However, there are also potential downsides to using wholesalers. For example, using a wholesaler means that the manufacturer will receive a lower price for their product than if they sold it directly to retailers or consumers. They also have less control over how their product is marketed and may find it difficult to establish a strong brand image. For example, a luxury fashion brand such as Gucci relies on carefully controlling its brand image and may not want to use wholesalers who could damage this image. Finally, wholesalers may not stock the full range of products that a large business produces, limiting the choice available to consumers.

In conclusion, whilst wholesalers can provide cost advantages and wider market reach for a large business, the potential downsides, such as lower profit margins and loss of control over marketing activities, also need to be considered. In the case of a large business looking to maintain a strong brand image and have more direct control over its marketing mix, selling directly to customers or using retailers could be a better option. However, for large businesses focused on reaching a wide audience with competitively priced products, using wholesalers can be an efficient and cost-effective method of distribution. Ultimately, the best approach will depend on the specific circumstances of the business and the market in which it operates.