MEANING OF CHANNEL OF DISTRIBUTION
Channel of distribution can also be called CHAIN OF DISTRIBUTION. Channel of distribution is refers to the various stages or channels through which finished goods are moved from the manufacturer/producer to the final consumer. It can also be referred to as the path way through which the ownership of products is transferred as it moves from the producer to the final consumers.
The chain of distribution is demonstrated by the following diagram;
Manufacturer / producer
Producer _ wholesaler_ Retailer _ consumer
THE MANUFACTURER / PRODUCER
He is the person who created or produces goods and sells in bulk to the wholesaler.
The wholesaler is a merchant who purchases goods in large quantity from the manufacturer and sell in small quantities to the retailers. He is the middleman essential in distribution.
FUNCTIONS OF THE WHOLESALER
- The wholesaler buys in large quantity from the manufacturer and sells in small quantities to the retailer. (BULK BREAKING)
- The Wholesaler requires a large space (WAREHOUSE) to store his goods .
- The Wholesaler stocks Limited varieties of goods in his Warehouse.
- The Wholesaler acts as an intermidiary between the retailer and manufacturer.
- The Wholesaler interacts freely with the manufacturer.
- The Wholesaler provide useful information about the goods to the manufacturer .
- The Wholesaler finances the manufacturer by ensuring prompt payment.
- The Wholesaler grade, blends and repacks the goods.
- The Wholesaler prevents price fluctuations by stocking the goods until they are demanded.( PRICE STABILITY)
- They give advice to the manufacturer and retailer.
A retailer may be defined as a trader who buys goods in small quantities from the Wholesaler and sells in smaller quantities or units or bits to the final consumer. He is one of the middleman essential in the chain of distribution.
FUNCTIONS OF THE RETAILER
- He sells in small quantities to the consumer.
- He provides after sales services like installation, repairs, home delivery and servicing to the consumer.
- He grants credit facilities to the consumers.
- He stocks variety of goods which enable the consumers to make choice.
- He supplies information to the manufacturer and wholesalers.
- He sells at convenient location and hours.
- He ensures door to door services to the consumers.
THE ROLE OF COOPERATIVES SOCIETY IN DISTRIBUTION
A co-operative society is defined as a voluntary business organization in which a group of individuals with common interests pool their resource together to promote the economic and welfare of their members in production, distribution, and consumption of goods and services.
THE ROLE OF COOPERATIVES SOCIETIES INCLUDE:
1 Stock variety of goods.
- Sell in small quantity to members.
- Grant credit facilities to members.
- Fight hoarding: By ensuring that they stock a lot of the products for use by members, (CONSUMERS).
- Eliminate middleman: By buying directly from manufacturer and selling directly to members.
7 Give advice to members.
ROLES OF THE GOVERNMENT IN DISTRIBUTIVE TRADE.
The government whether at the Federal, State and Local level has a major role to play in the distribution of goods or commodities. Government is able to participate in the distribution through the establishment of distributive agencies like ;
- The Nigerian National Supply Company Limited (NNSC )
- Marketing Board.
- The River basin Authorities.
THE ROLE OF GOVERNMENT IN THE DISTRIBUTION OF COMMODITIES includes;
- Provision of transport system.
- Provision of storage facilities.
- Price stabilisation.
- Prevention of artificial scarcity.
- Importation of essential commodities.
- Control of prices.
- Establishment of communication system.
PROBLEMS OF DISTRIBUTION OF COMMODITIES IN WEST AFRICA.
Middleman that is the wholesaler and retailer do encounter lots of problems in the course of the distribution of commodities.
These problems are;
- Inadequate infrastructural facilities like electricity and telephone.
- Hoarding and speculation.
3 Inadequate storage.
- Inadequate transport system.
- Packaging problem.
- Insecurity on our roads.
- Long chain of distribution;, There are so many middleman.
- Inadequate information; The producers, sellers, and buyers do not get adequate information regarding the prevailing market condition.
- Administration bottlenecks in the collection and handling of goods: Excessive delay in the supply and delivery of commodities is a common features in West Africa distribution system.