Distributive Trade

 

Welcome to class! 

In today’s class, we will be talking about the distributive trade. Enjoy the class!

Distributive Trade

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At the end of the lesson, you should be able to;

  • Give the meaning of the channel and process of distribution trade
  • Distinguish between wholesale and retail Functions of distribution trade
  • Describe the agencies of distribution and their contribution to trade and the economy of the country at large

Distributive trade is the totality of all forms of trade activities, from the procurement of goods from the manufacturer to delivering these goods to the consumers. as the various chain of channels through which finished goods are moved from the manufacturer to the final consumer, it includes wholesale and intermediation trade, retail and trade in motor vehicles and motorcycles trade.

The study of the structure of an economy is, in essence, the study of the ‘Anatomy’ of that economy. The structure of the Nigerian economy is a system whereby the study of the structure of an economy is, in essence, the study of the ‘Anatomy’ of that economy. That is, it is the process of getting goods from the producer to the final consumers.

There are various channels through which goods get to the final consumer commonly called the channel of distribution. The common channel through which the consumer get the goods is represented as:

  • Manufacturer /Producer
  • Wholesaler
  • Retailer
  • Final consumer

Process of distribution

It involves all human and physical means which aid the smooth transfer of goods from the manufacturers to the final consumers. The process of distribution involves:

  1. Middlemen– the middlemen or agents are human elements involved in the distribution of goods from the producers to the final consumers, eg wholesaler and retailer
  2. Transportation– is the medium through which the finished goods are moved by air, land or water from the manufacturers to the final consumers
  3. Advertisement– is the process of creating awareness in the mind of the public about the existence of a product.
  4. Warehousing– is a process through which the goods produced are stored until they are needed.

Self-evaluation:

  1. Define distributive trade
  2. Explain the process of distribution

The wholesaler

A wholesaler may be defined as the trader who buys goods in large quantity from the producer and sells in small quantity to the retailer. The wholesaler is an essential and desirable element in the channel of distribution and production. He is sometimes called a middleman because he is in-between the producer and the retailer.

Functions of the wholesaler to the producer
  1. Bulk breaking: This is one of the most essential functions of the wholesaler as he is able to satisfy the needs of purchasing in large quantity from the producer.
  2. He also finances the retailer by giving credit facility to them.
  3. The wholesaler finances the producer by making prompt or advance payment for goods.
  4. He helps to make the prices of goods stable, especially where production is irregular.
  5. He provides warehousing or storage facilities for goods bought.
  6. Wholesalers help to create markets for producers and themselves through large scale advertising use of sales representatives etc.
  7. He gives vital information about the market situation to the producer.
  8. He completes the manufacturing of some goods by doing the packaging and branding.
Functions of the wholesaler to the retailer
  1. He enables the retailer to stock a variety of goods
  2. He provides the retailer with credit facilities
  3. The wholesaler advises the retailer based on his expert knowledge of the product
  4. He provides a link between the producer and the retailer
  5. He helps to transport goods to the retailer’s shop

Self-evaluation:

  1. Who is a wholesaler?
  2. How is a wholesaler regarded as a “Bulk Breaker”

The retailer

A retailer may be defined as the trader who buys goods in small quantity from the wholesaler or directly from the manufacturer and sells in units to the final consumer.

He is essentially in the channel of distribution because he is the last link to the consumer, so he is also a middleman.

Retail trade can be broadly classified into two types namely; 1. Small scale retail trade 2. Large scale retail trade

  • Small scale retail trade comprises of a kiosk, market or stallholder retailing, street or roadside retailing, cycle boys, mobile shops retailing, itinerant or hawking retailing etc.
  • Large scale retailing can be the form of department stores, multiple shops, supermarkets, mail–order business, hypermarkets, and retail co-operative societies.
Functions of the retailer
  1. He brings goods to the consumer thus saving the consumer the inconvenience of going far.
  2. He assists the producer and wholesaler in promoting lesser-known goods
  3. The retailer stocks variety of goods to satisfy the taste of the consumer.
  4. He advises the consumer and wholesaler on how to use certain products and about new development in the market
  5. He provides after-sales services especially for technical products like computer, television, typewriters etc.
  6. The retailer finances the consumer by selling at the time on credit.
  7. He completes the distribution chain by making goods available to the consumer; thus completing production
  8. He provides market information to buyers and sellers
  9. The retailer advertises the goods through fascinating window displays

Self-evaluation:

  1. What roles do the retailers play in the distribution process
  2. What is the difference between multiple shops and departmental stores?

Reading assignment

  1. Amplified and Simplified Economics SSS by Femi Longe page 132-142.
  2. Comprehensive Economics for SSS By. J.U. Anyaele chapter 12 pages 97 – 98
  3. New Approach Economics By K.U. Nnadi and A.B. Falodun chapter 8 pages 77 – 80
General revision
  1. Outline the merit of Joint Stock Company.
  2. What are the problems partners are likely to face in partnership business?
  3. Mention four reasons for government participation in business.
  4. Write a short note on (I) shares    (ii) debenture
  5. Who is a shareholder?

Theory

  1. “The wholesaler performs useful economic functions” explain.
  2. Highlight five differences between a wholesaler and a retailer.

 

In our next class, we will be talking about the Middleman.  We hope you enjoyed the class.

Should you have any further question, feel free to ask in the comment section below and trust us to respond as soon as possible.

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