A large sized company manufacturing shoes of Indian market has to determine whether it should
use wholesale set up or its own chain stores for distributing its products. What alternatives would you suggest? Give reasons in support of your answer.
In the above case, we find there are two alternatives be frore the company
(i) To have wholesale as middlemen. (ii) To have its own multiple shops.
Both the alternatives have their own merits and demerits.
Considering the merits and demerits of both the alternatives, we are. of the opinion that multiple shops are the better alternative then the wholesalers due to following reasons
(i) Multiple shops eliminate middlemen. Hence, there is direct contact between the company and consumers. All advantages of elimination of wholesalers can be enjoyed.
(ii) Since the company is large sized, it means company has sufficient financial resources to have its own shops. Thus the company is in a position to eliminate middlemen.
(iii) Company is manufacturing shoes i.e., durable consumer product, multiple shops are better alternative.
(iv) Company can approach maximum customers through its own shops. Wholesalers may not find it profitable to deal in shoes of a new company and therefore , wholesalers will not be taking interest.
(v) Multiple shops have a better appeal to consumers. Bata Shoe Company is a good example. In brief, we can suggest to the company that multiple shops will be the better alternative for distribution of its product- shoes.