Manufacturer-Retailers-Customers
Business: Cambridge International GCSE (2027 Exams), topic 3.3.12
Manufacturer-Retailers-Customers
A business can choose to skip wholesalers and sell directly to retailers. A retailer is any shop that sells directly to the customer in small quantities. Tesco and the corner shop at the end of the road are both examples of retailers.
Advantages: higher margins or lower prices
- Bypassing wholesalers makes it likely that customers will pay lower prices because the business is “cutting out a middle man”.
Advantages: control over shops (retailers)
- Going directly to retailers means that a producer or manufacturer can have complete control over which shops customers can buy their products from.
- A luxury brand may not want their products stocked in Tesco or TK Maxx as it may lead consumers to perceive their brand as lower quality.
Disadvantages: hard to contact retailers
- It can be hard for a business, especially new start-ups, to get retailers to stock their products.
- This means that it can be harder for a firm to reach as many people and it could take longer to sell a business' products.
Disadvantages: higher logistics costs
- Selling to retailers directly may increase a business’ delivery and logistics costs if they have to deliver all the products to a retailer themselves.
Test yourself on Manufacturer-Retailers-Customers
Which of the following is not an example of a retailer?
Why do businesses bypass wholesalers?
Why might a start-up use a wholesaler to sell their products?