3- year student
Sp. “Science of
commodities and trade
Scientific adviser -
WHOLESALE INTERMEDIARY SERVICES IN THE COMMODITY MARKET
Wholesale intermediaries occupy the leading position in the commodity market among the marketing middlemen. The main types of wholesale intermediaries are distributors, sales agents, commission agents, commodity middlemen, consignees, attorneys, dealers, independent wholesalers, merchants and others.
Distributors deal with the product sales and play the significant role in the commodity support of market subjects.
Distributors have an exclusive right to purchase, storage, sale, determine the list of goods and services in a particular market.
Distribution companies are relatively large independent commercial-intermediary organizations that possess their own or leased warehouse space, perform the sales of products based on the wholesale purchases, at their own expense, directly from manufacturers, deliver to the warehouse, store and ship (supply) them to buyers.
Distribution firm is closely connected with manufacturers, but isn’t its affiliate, although it shares a certain commercial risk with them. There is a possible variant of the general distribution firm existence that arranges sales of goods through its own downstream distribution network. Commodity market subjects often use distribution companies for the active promotion in the sales markets of their products, especially in other regions.
From the economic efficiency point of view a high level of specialization is common to distributors and it allows them to create and effectively use appropriate means for storing and transporting of commodity products.
The important work sphere of distribution companies is the establishment and development of relations with dealers.
A dealer is an independent, relatively middle and small entrepreneur (physical or legal person) that provides professional trading operations consisting in the wholesale purchase of goods with a massive demand at various sellers (producers, agents, distributors) , at his\her own expense, for resale. Buying goods a dealer becomes, for some time, their owner and then sells them, on his behalf, in any market at a certain price to individual customers within a small-scale wholesale and retail trade.
Lacking their own storage space, dealers usually try to realize commodity goods as quick as possible in order to reduce the cost of the leased warehouse.
The activity of dealers is not limited by purchase-sale transactions. They can provide a wide range of services both to producers and consumers, namely:
1) market research;
2) commodity product advertising;
3) resale service;
4) centralized delivery of goods to customers;
5) installation, assembly, commissioning, a trial run of technics, machinery and equipment;
6) after-sale service;
7) repairs of the most complex and expensive components;
8) collecting, summarizing and providing a commodity manufacturer with the information about defects, design flaws found in the machinery and equipment operation.
Commissioners are the wholesale intermediaries engaged in purchase-sale operations of consumer goods, on their own behalf, but at the expense of customers (sellers and buyers).
Commission firms (houses and shops) have their own warehouses, appropriate transport communications and perform the following functions:
1) detection of the presence and sales of unused products to other businesses, organizations and individuals in the commodity market;
2) the conclusion of commission agreements with the subjects of the commodity market to acquire the necessary commodity-material valuables for personal use and sale on request;
3) reception, storage and sale of goods accepted for sales from companies, organizations or individuals;
4) implemetation of calculations connected with the reception and sales of goods.
The commissioner may provide some additional paid services to the owner of the goods (consignor), namely the delivery of goods to a store, reception and valuation of goods at home, and in the terrotiry of the enterprise, etc.
Consignees (a kind of commissioners) provide services to business commodity market subjects, dealing with foreign trade. Thus, the owner of goods (consignor) gives them to a consignee for sale from the warehouse of the last, that is provides goods to the consignee for the particular period of time to sell. The Consignment Agreement defines the range, quantity, quality, the lowest price of products, and the territory in which goods can be sold.
In fact, a consignee is the foreign trade commissioner, with the only difference of selling goods at a price set by the consignor.
In practice, one use the consignee service when exporting consumer goods (cars, refrigerators, furniture, etc.), as well as machinery, equipment, component part using the favorable situation in the international market, and the time factor or supply determined by circumstances prevailing in commercial business activities of the commodity market subject.
An agent (from Latin ‘agenlis’ means active) performs actions in the commodity market related to the sale or purchase of goods, at the expense and on the behalf of the guarantor, in the particular area. Facilitating trading transactions, the agent himself does not become the owner of the goods, even temporarily.
There are the following types of agents:
1) agents of manufacturers usually work for a few companies that produce commodity products, have the right to distribute a particular product in a particular territory, and deal with complementary, non-competitive products. These intermediaries are sufficiently aware of the range of commodity products of each manufacturer, have the information on market conditions, have extensive contacts with other agents, consumers, marketing and information centers, with advertising, insurance, customs and other organizations. Middle and small businesses cooperate with such agents and are not interested in keeping their own sales staff. Large firms also work with them and try to penetrate new markets and expand the range of potential buyers;
2) sales agents have commercial and economic relations with the middle and small enterprises selling all commodity products manufactured by them. They supersede trade and marketing staff of the manufacturer, work at prices, volume and range of supplies, marketing, rationalization of economic relations, the flow of goods and others. The activity of these agents isn’t usually geographically limited.
A broker (from English ‘broke’ means commissioner) is an intermediary in the commodity market, whose main responsibility is to connect counteragents at the commodity exchange.
The broker is an individual registered at the commodity exchange as a businessman who has a contractual relationship with the brokerage organization. This is a real intermediary that does not have a product, even temporarily, and has no power to conduct independently trade transactions without client’s authorization. A broker can not act as a buyer or seller of goods; isn’t the parties’ representative in the transaction; isn’t in a contractual relationship with either the seller or the buyer, but operates on the basis of their individual errands; receives compensation in the form of commissions.
The broker must be an expert on market conditions, has deep knowledge of a particular market, takes into account the psychology of buyers and sellers, has specific implementations of different types of goods, and be aware of legal rules and methods of trade operations conclusions.
Thus, the expansion of the complex services provided by wholesale intermediaries is an integral part of improving the entire wholesale warehouse activity, including relations with industrial enterprises (suppliers) and retail trde.
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