Profit Margin of Wholesale Industries as Compared to Small Scale Industries
Profit Margin of Wholesale Industries as Compared to Small Scale Industries
Free Online Articles Directory
Why Submit Articles?
Top Authors
Top Articles
FAQ
AB Answers
Publish Article
0 && $ .browser.msie ) {
var ie_version = parseInt($ .browser.version);
if(ie_version Hello Guest
Login
Login via
Register
Hello
My Home
Sign Out
Email
Password
Remember me?
Lost Password?
Home Page > Finance > Investing > Profit Margin of Wholesale Industries as Compared to Small Scale Industries
Profit Margin of Wholesale Industries as Compared to Small Scale Industries
Edit Article |
Posted: Dec 06, 2007 |Comments: 0
| Views: 1,412 |
Share
]]>
In the US most of the agricultural products are sold through wholesale channels. In such a system, small farmers either sell their products in wholesale directly to local grocery stores, food service establishments, natural food stores, or food buying co-ops or to buyers who then resell those products, functioning as middlemen in the marketing chain. So, when we say ‘wholesale’ what do we mean by it or simply what is a wholesale market?
Well, a wholesale market can be defined as a market where the customers buy products in bulk or in huge quantities, but need not be the final customers. They are actually middlemen between the manufacturers and retailers or are retailers themselves who buy the manufactured products in large lots to achieve economies of scale. These products are then sold either to the retailers or to the final consumers directly. These middlemen are integral for wholesale marketing, since not every manufacturer has the network or ability to reach the final buyers to sell their products. The most advantageous aspect of wholesale marketing is that the profit margin in this type of business is generally higher than the small scale markets or the retailers who are the ultimate source from whom the final buyers buy their product.
The working of wholesale marketing is a completely ‘buy’ and ‘sell’ process, where there is no scope of stocking the goods and then selling it though in some markets. It is done where the wholesaler is directly intending to sell his product to the final buyer. As discussed earlier, profit margins of wholesalers are normally higher than the small scale industries because of their economies of large scale buying and selling. They also sell their products to the retailers without much time gap because of which there is immediate flow of cash, which avoids any event of liquidity crunch for the wholesalers. As a result, they can keep on rolling money and make profits. On the other hand, small scale industries are not efficient enough to sell their products in a short period of time from the date of manufacturing because of their inadequate networking. This increases inventory level and heightens operating costs, which ultimately affects their bottom line adversely. Therefore, it makes a lot of sense for the small scale Industries to seek the expertise of the middlemen, as discussed above, to reach their target buyers.
There is another advantage that wholesale marketing has over the small scale industries and that is dependence on raw materials. All these small scale industries, depending on what products they are manufacturing, are dependent on some or the other raw material. Moreover, most of them do not have any captive source for such raw material instead they source it from other small and medium-scale industries. In this way, they are exposed to fluctuations in raw material prices, which take its toll on their margins if they are unable to pass these price hikes to the end customers. A wholesaler, being an intermediary only, does not have to worry about any bottom line hit. At the most he can experience some margin contraction, but definitely minimal losses.
Retrieved from “http://www.articlesbase.com/investing-articles/profit-margin-of-wholesale-industries-as-compared-to-small-scale-industries-275679.html”
(ArticlesBase SC #275679)
Liked this article? Click here to publish it on your website or blog, it’s free and easy!
William King -
About the Author:
William King is the director of Daily Trader: http://www.dailytrader.com , Wholesale Pages: http://www.wholesalepages.co.uk and Canadian Wholesalers and Dropshippers Dropshipping Directory: http://www.wholesale-canada.com . He has 18 years of experience in the marketing and trading industries and has been helping retailers, entrepreneurs and startups with their product sourcing, promotion, marketing and supply chain requirements.
]]>
Questions and Answers
Ask our experts your Investing related questions here…200 Characters left
Where i get the machine for agarbhati production? and cost of the machine,and what the goverment facility to start small scale industries?
The profit margin of your organization has been reduced recently. Because, competitors have increased market share through web commerce. How to increase the profit margin of your organization?
How is gross profit margin calculated ?
Rate this Article
1
2
3
4
5
vote(s)
0 vote(s)
Feedback
RSS
Print
Email
Re-Publish
Source: http://www.articlesbase.com/investing-articles/profit-margin-of-wholesale-industries-as-compared-to-small-scale-industries-275679.html
Article Tags:
wholesale, wholesaler, small scale, middlemen, buy, sell, profit
Related Videos
Related Articles
Latest Investing Articles
More from William King
How to Find Wholesale Craft Supplies
http://www.craftmarketer.com Find wholesale craft supplies to increase your profits from selling crafts you make. Free video on how to sell crafts as a home based business. (01:38)
How to Rehab Homes in Minimum Time for Maximum Profit – Part 3
Learn how to Rehab Homes in Minimum Time for Maximum Profit. Long-time rehabber Scott Britton reveals some of his special methods he uses to find, buy, rehab and sell houses, but not necessarily in that order! (01:33)
How to Rehab Homes in Minimum Time for Maximum Profit – Part 1
Learn how to Rehab Homes in Minimum Time for Maximum Profit. Long-time rehabber Scott Britton reveals some of his special methods he uses to find, buy, rehab and sell houses, but not necessarily in that order! (01:43)
How to Rehab Homes in Minimum Time for Maximum Profit Clip 2
Learn how to Rehab Homes in Minimum Time for Maximum Profit. Long-time rehabber Scott Britton reveals some of his special methods he uses to find, buy, rehab and sell houses, but not necessarily in that order! (01:09)
Real Estate Investing Tips – Trends Part 3
Learn how you can almost always make a profit in real estate provided you pay attention to the cycle with Judd Kessler. A.D. Kessler’s Real Estate Roundtable #140 Clip 3 from Creative Real Estate Magazine at www.cremag.com. (01:05)
Low Wholesale Car Audio Prices From China Have Big Car Electronics Brands Worried
Shenzhen, China (PRWeb) November 21, 2006 — Will people considering upgrading a car audio system in 2007 to something a bit more impressive than a standard car stereo / radio, only stick to well-known brands, or can they consider opting for something a lot cheaper? Wholesale importers think they already know the answer to that question, which is why in the New Year consumers can expect to see a lot more multimedia car gadgets where the only “brand” they need to know is “Made In China”.
By:
Alexander G. Aleksandrovl
Automotivel
Nov 26, 2006
lViews: 2,992
Wholesale Electronics China – High Profit Market
