Place & Wholesalers
Business: Edexcel GCSE, topic 2.2.14
Place
Place (or location) is about when and where a product (or service) is available to the people buying it.
Distribution channels
- The different ways that a business can distribute their product are called different “distribution channels”.
- Some potential distribution channels for businesses are:
- Manufacturer-wholesalers-retailers-customers.
- Manufacturer-retailers-customers.
- Direct to consumer.
Businesses can have multiple distribution channels
- For example, Nike have their own physical stores, but they also sell online and sell to retailers for them to sell in their stores.
Manufacturer-Wholesalers-Retailers-Customers
A business can distribute their product via wholesalers. Wholesalers sell products in bulk to a network of retailers and then retailers sell the products to customers.
Large network of buyers
- Wholesalers already have a large network of buyers.
- This lets a business reach a lot of customers quickly.
Less interaction with customers
- A downside of using wholesalers is that the business will not have much personal interaction with customers.
- This can lead to worse customer service.
Profit sharing
- Another downside is that both wholesalers and retailers take a cut of the profit. This means that customers are likely to pay higher prices.
- This may make the business less competitive on price.
Test yourself on Place & Wholesalers
Which of the following is not a potential distribution channel for a business?
When a farmer sells their produce in their own farm shop, which distribution channel are they using?
Which of the following is not a disadvantage of wholesalers?
Why can wholesalers lead a business to have worse customer service?