Wholesale marketing
Encyclopedia
The consumption and production of marketed food are spatially separated. Production is primarily in rural areas whilst consumption is in urban areas. Agricultural marketing
is the process that overcomes this separation, allowing produce to be moved from an area of surplus to one of need. Food reaches the consumer by a complex network, involving production, assembly, sorting, packing, reassembly, distribution and retail stages. In developing countries the linkage between the producer and the retailer is still usually provided by assembly and wholesale
markets, where wholesale marketing takes place using a variety of transaction methods. Recent years have seen an expansion of wholesale marketing in E. European and former CIS
countries. On the other hand, the growth of supermarkets in many regions has seen the development of direct marketing and a reduced role for wholesale systems.
to be obtained in the transportation of produce from farm to market. The people involved in wholesaling can act simply as merchants, buying and selling produce, can be brokers dealing in orders rather than goods, or can be commission
agents. Prices are normally established by negotiation but some wholesale markets use the auction
system. The auction is compulsory in all wholesale markets in big cities in Japan. A comparison of the Japanese system with that in Brisbane
, Australia, found that prices moved more frequently and with a greater degree of volatility in Japan than those at Brisbane.
chains, often by means of contract farming
arrangements or through the use of preferred suppliers.
Following the collapse of the iron curtain
a large number of markets were developed in Eastern and Central Europe in the 1990s and early 2000s. Examples include markets in Warsaw, Gdansk, Budapest, and Bucharest. In other parts of the world, new markets have been built in Amman, Cairo and Mumbai, among many recent developments. Very few new wholesale markets have been built in western countries in the last decades, although old markets have been relocated to new sites (e.g. the new Covent Garden Market
relocated to Nine Elms
in London
and Rome's new wholesale market, relocated from the centre to the east of the city). Those that already exist have tended to also attract warehouses for integrated food distribution, changing their role to "food centers" (in the USA) and including other non-fresh food products. Wholesale markets still have a role in the marketing of horticultural
produce but the traditional fresh meat and fish wholesale markets, particularly those dealing with wholesale live produce, are generally being closed down in major urban centres.
In developing countries, changes in work patterns, particularly the employment of women, and the impact of technological innovations in post-harvest handling, food processing and storage, including the use of domestic refrigerators, tends to encourage the development of one-stop shopping at supermarkets, often on a once-a-week basis. The challenge for wholesale markets in such a trading environment is to retain turnover, both by providing new services to supermarkets and by developing services to the non-supermarket trade and the growing hotel and catering sectors.
Terminal wholesale markets are located in major metropolitan areas, where produce is finally channelled to consumers through trade between wholesalers and retailers, caterers, etc. Produce may also be assembled for export. In some countries, such as India and China, terminal markets also supply other parts of the country. For example, New Delhi serves as a distribution centre to the south of India for apples grown in the Himalayan foothills. The problems of terminal wholesale markets are usually ones of congestion caused by an unsuitable location or by an inappropriate mixture of wholesale and retail functions. Traditionally, wholesale markets were built adjacent to city centres, located at a focal point of the inter-city transport facilities and close to the main retailing areas. Population growth, changes in urban land-use patterns and the development of modern transport systems have all influenced the suitability and functionality of existing sites.
is, as its name implies, an organization representing such markets around the world.
Agricultural marketing
Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. Numerous interconnected activities are involved in doing this, such as planning production, growing and harvesting, grading, packing, transport, storage, agro- and food processing,...
is the process that overcomes this separation, allowing produce to be moved from an area of surplus to one of need. Food reaches the consumer by a complex network, involving production, assembly, sorting, packing, reassembly, distribution and retail stages. In developing countries the linkage between the producer and the retailer is still usually provided by assembly and wholesale
Wholesale
Wholesaling, jobbing, or distributing is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services...
markets, where wholesale marketing takes place using a variety of transaction methods. Recent years have seen an expansion of wholesale marketing in E. European and former CIS
CIS
CIS usually refers to the Commonwealth of Independent States, a modern political entity consisting of eleven former Soviet Union republics.The acronym CIS may also refer to:-Organizations:...
countries. On the other hand, the growth of supermarkets in many regions has seen the development of direct marketing and a reduced role for wholesale systems.
Transaction methods
Wholesaling facilitates the economic function of buying and selling (usually termed as "price formation") by allowing the forces of supply and demand to converge to establish a single price for a commodity. The wholesaler may also perform storage and warehousing functions, as well as allowing economies of scaleEconomies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
to be obtained in the transportation of produce from farm to market. The people involved in wholesaling can act simply as merchants, buying and selling produce, can be brokers dealing in orders rather than goods, or can be commission
Commission (remuneration)
The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold...
agents. Prices are normally established by negotiation but some wholesale markets use the auction
Auction
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder...
system. The auction is compulsory in all wholesale markets in big cities in Japan. A comparison of the Japanese system with that in Brisbane
Brisbane
Brisbane is the capital and most populous city in the Australian state of Queensland and the third most populous city in Australia. Brisbane's metropolitan area has a population of over 2 million, and the South East Queensland urban conurbation, centred around Brisbane, encompasses a population of...
, Australia, found that prices moved more frequently and with a greater degree of volatility in Japan than those at Brisbane.
Wholesaling trends
Wholesale markets develop in a number of stages. They start as general markets, then become more specialized by trading in specific types of produce. A later stage is to transact only graded and well packaged produce. A recent trend in Western Europe and the USA is for large retailers to by-pass the wholesale market system. Direct links are created between producers and supermarketSupermarket
A supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments...
chains, often by means of contract farming
Contract farming
Contract farming is agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products. Typically, the farmer agrees to provide established quantities of a specific agricultural...
arrangements or through the use of preferred suppliers.
Following the collapse of the iron curtain
Iron Curtain
The concept of the Iron Curtain symbolized the ideological fighting and physical boundary dividing Europe into two separate areas from the end of World War II in 1945 until the end of the Cold War in 1989...
a large number of markets were developed in Eastern and Central Europe in the 1990s and early 2000s. Examples include markets in Warsaw, Gdansk, Budapest, and Bucharest. In other parts of the world, new markets have been built in Amman, Cairo and Mumbai, among many recent developments. Very few new wholesale markets have been built in western countries in the last decades, although old markets have been relocated to new sites (e.g. the new Covent Garden Market
New Covent Garden Market
'New Covent Garden Market' is the largest wholesale fruit, vegetable and flower market in the UK. Located in Nine Elms between Vauxhall and Battersea, South West London, the Market covers a site of 57 acres and is home to approximately 200 fruit, vegetable and flower companies.The Market serves...
relocated to Nine Elms
Nine Elms
Nine Elms is a suburb of London, situated in the far north-eastern corner of the London Borough of Wandsworth between Battersea and Vauxhall.It is primarily an industrial area, dominated by Battersea Power Station, Battersea Dogs and Cats Home, railway lines, a major Royal Mail sorting office and...
in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
and Rome's new wholesale market, relocated from the centre to the east of the city). Those that already exist have tended to also attract warehouses for integrated food distribution, changing their role to "food centers" (in the USA) and including other non-fresh food products. Wholesale markets still have a role in the marketing of horticultural
Horticulture
Horticulture is the industry and science of plant cultivation including the process of preparing soil for the planting of seeds, tubers, or cuttings. Horticulturists work and conduct research in the disciplines of plant propagation and cultivation, crop production, plant breeding and genetic...
produce but the traditional fresh meat and fish wholesale markets, particularly those dealing with wholesale live produce, are generally being closed down in major urban centres.
In developing countries, changes in work patterns, particularly the employment of women, and the impact of technological innovations in post-harvest handling, food processing and storage, including the use of domestic refrigerators, tends to encourage the development of one-stop shopping at supermarkets, often on a once-a-week basis. The challenge for wholesale markets in such a trading environment is to retain turnover, both by providing new services to supermarkets and by developing services to the non-supermarket trade and the growing hotel and catering sectors.
Types of wholesale market
Secondary wholesale markets are generally found only in developing countries these days. They are located in district or regional cities and take the bulk of their produce from rural assembly markets located in production areas, where the transactions are small scale and usually take place between farmers and traders. The distinction between rural assembly markets and secondary wholesale markets is that secondary wholesale markets are in permanent operation (rather than being seasonal in nature or dealing in specialized produce), larger volumes of produce are traded than at the rural assembly markets and specialized functions may be present, such as commission agents and brokers.Terminal wholesale markets are located in major metropolitan areas, where produce is finally channelled to consumers through trade between wholesalers and retailers, caterers, etc. Produce may also be assembled for export. In some countries, such as India and China, terminal markets also supply other parts of the country. For example, New Delhi serves as a distribution centre to the south of India for apples grown in the Himalayan foothills. The problems of terminal wholesale markets are usually ones of congestion caused by an unsuitable location or by an inappropriate mixture of wholesale and retail functions. Traditionally, wholesale markets were built adjacent to city centres, located at a focal point of the inter-city transport facilities and close to the main retailing areas. Population growth, changes in urban land-use patterns and the development of modern transport systems have all influenced the suitability and functionality of existing sites.
Representative bodies
The World Union of Wholesale MarketsWorld Union of Wholesale Markets
The World Union of Wholesale Markets is a non-profit association that engages in all fields and activities related to the promotion, development and international exchange of expertise and information on food markets....
is, as its name implies, an organization representing such markets around the world.
Further reading
- Tracey-White, John, Wholesale Markets: Planning and Design Manual
- [ftp://ftp.fao.org/docrep/fao/003/X3680E/X3680E00.pdf Sanchez-Monjo, E. and Densley, R., Managing Wholesale Markets]