SS1 Commerce Lesson Note on Wholesale Trade

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TOPIC: HOME TRADE

CONTENT:

1. Reasons why retail business may fail?
2. Wholesale trade
3. Channel of distribution

SUB-TOPIC 1: WHY RETAIL BUSINESSES FAIL?

The following are the reasons why retail business fails in Nigeria

1. Finance: Because of the generally small size, retail businesses do not have ample opportunities to obtain finance. Banks and other financial institutions do not often give loan to small borrowers who are also disadvantaged in accessing the capital market or stock exchange to raise funds.
2. Limited managerial and professional capacity: management and professional services are often limited to whatever the proprietors themselves can provide.
3. Simplistic and non-modern modes of operation: adequate financial and accounting records are sometimes not kept. Also information technology (computer terminals and networking, electronics trading etc are not often used. All these may affect the competitiveness of the business.
4. Lack of diversification: because of the small size, retailers may not be able to diversify into many areas of merchandising, which would require much money and management capability. For example, a fall in the demand for a product may easily result in business collapse.
5. Limited government attention: government attention is more focused on larger enterprises that are often regarded as too big to fail because of the wider effects that a failure would on the society.
6. Unfavorable market condition and retail business environment.
7. Aggressive competition and incursion from wholesalers, manufacturer and so on.

EVALUATION

1. Give three reasons why retail business fail in Nigeria.
2. List and explain types of retail trade.

SUB-TOPIC 2: WHOLESALE TRADE

MEANING OF WHOLE SALE: A wholesaler is a trader who buys goods in bulk or in large quantities from the producer/manufacturer and sells in small quantities to the retailer.

FEATURES OF WHOLESALE TRADE

1. Bulk breaking
2. Buys goods in large quantity and sells in small quantity to retailer.
3. They are the middlemen between the producer and retailers.

FUNCTIONS OF WHOLESALERS TO THE MANUFACTURER/PRODUCER.

1. Breaking of bulk: they buy in bulk and sell in small quantities to the retailers.
2. Warehousing function: The wholesalers are able to purchase very large quantities from the producers, which they store in the warehouse until they are required by the retailers.
3. Transport and delivery service: they receive large quantities from the producers make them available to countless retailers through their own network of distribution centres.
4. Risk bearing: the wholesaler can anticipate business risk in distribution and take appropriate measures to reduce their impact by taking the necessary insurance cover.
5. Branding, packaging and labeling: The wholesalers may prepare commodity for sale by packaging , branding and grading.
6. Advertising function: they do most of the work of finding ready-made market for the products. This is done through advertising and promotion.
7. Price stability
8. Financing the producers.

FUNCTIONS OF WHOLESALERS TO RETAILERS

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