The trade channel in which the retailers of our country operate usually takes the following shape:
Manufacturers–>Wholesalers–>Retailers
The manufacturers stand in the first stage while the wholesalers in the middle. The retailers stand in the final stage of the marketing of consumer goods. The usual practice is that the wholesalers buy goods from the manufacturers directly and the retailers purchase from the wholesalers.
The retailers often buy directly from the manufacturers. When the retailers approach the producers other than through the wholesalers the normal trade channel described above is disrupted. The chain is also broken if the retailers buy directly from the sole agents of the manufacturers. In direct selling, the retailers incur cost for taking delivery of goods from the manufacturers while the manufacturers are also to assume m ore functions for storing, transportation and sales promotion.
Methods of Obtaining Supply
The retailers obtain their supplies from the following sources :
(a) Wholesalers are the most important source of supply for the retailers. They supply about 75% of the retail merchandise.
(b) The next important source of supply for the retailers is the manufacturers who supply about 13% of the retail goods.
(c) The third important source is the sole agents of the manufacturers who supply about 10% of the goods.
(d) The retailers also obtain their supplies from importers, hawkers and sales representatives. They supply only about 2% of the retail goods.
(e) Some retailers produce their goods on their own account. For example, garment stores, shoe stores manufacture the products and sell them directly to the consumers. But this constitutes a very negligible portion of the retail merchandise.
It was found in Dhake that big retailers buy more from manufacturers than the small retailers. If the retailers buy in reasonably a large quantity the manufacturers offer more quantity discounts and rebates than the wholesalers.
Methods of Establishing Contact with Sources of Supply
In retailing establishment of contact with the various sources of supply is very important. The methods followed in establishing contact with the manufacturers or wholesalers or other sources are as follows:
a) Contact by the supplier by mail.
(b) Contact by the supplier by person.
(c) Contact by retailer himself through mail or personal contact.
Although the contact made by mail rather than by person results in lower cost, it is found that majority of the retailers in our country have to contact the suppliers themselves in person. About 88.36 per cent of the retailers contact the sources of supply in person while only 2.11 per cent contact by mail.
The distributors or representatives of the manufacturers contact the retailers much less frequently than the retailers contacting the suppliers in person. Inadequate facilities for communica-tion and inadequate information by the wholesalers about the retailers are the major reasons for such a situation.
More than 80% of the retailers are to go to the sources of supply in person to obtain the goods and only 8% get the goods supplied to their shops. Very few retailers get supply of goods by railway (2.12 %), steamer (1.59%), air (1.06%) and post office (2.64 %).
The prevalence of taking personal delivery of goods by retailers invariably increases the cost of retailing in Bangladesh because the retailer has to incur all the expenses for personal visit besides loss of time. Thus it decreases the efficiency of retail marketing in our country.
How Retail Trade is Financed in Bangladesh
The amount of capital used by the retailers in Bangladesh depends upon the importance of the place where they are located. On the average, majority of the retailers have capital not exceeding Tk. 10,000. There are some retailers who have capital more than Tk. 50,000. After independence, many retailers in the big towns like Dhaka and Chittagong employ more than one lakh taka as their capital. The retailers in the village markets use very small amount of capital.
Both the fixed and circulating capital are financed by the retailers in the following ways:
(1) Own fund: The retail trade in our country is mostly financed by the retailer’s own fund. About 68 % of the total capital are provided by their own money. The retailers supply the major portion of the capital from their own pockets owing to difficulty in obtaining funds from other sources.
(2) Borrowing from banks: The amount available from the banks is not satisfactory. The retailers obtain roughly 13% of their capital from bank as loans.
(3) Borrowing from friends: The retailers also obtain funds through borrowings from friends and relatives. This source supplies only about 1.41 per cent.
(4) Credit from suppliers : About 17 per cent of the business of the retailers are financed by credit from suppliers.
Many retailers are to make advance payment to suppliers. Some manufacturers and wholesalers demand advance payment from the retailers and that is why, they are to make advance payment.
