| Retailing and Wholesaling 395

Chapter 13 | Retailing and Wholesaling 395

reps, catalog, and Web site, Grainger links customers with the supplies they need to keep their facilities running smoothly— everything from light bulbs, cleaners, and display cases to nuts and bolts, motors, valves, power tools, test equipment, and safety supplies. Grainger’s 600 branches, 22 strategically located distribution centers, more than 18,000 employees, and innovative Web sites handle more than 115,000 transactions a day, and 98 percent of orders ship within 24 hours. Grainger’s customers include organizations ranging from factories, garages, and grocers to schools and military bases. Customers include notables such as Abbott Laboratories, General Motors, Campbell’s Soup, American Airlines, and the U.S. Postal Service.

Grainger operates on a simple value proposition: to make it easier and less costly for customers to find and buy MRO sup- plies. It starts by acting as a one-stop shop for products needed to maintain facilities. On a broader level, it builds lasting rela- tionships with customers by helping them find solutions to their overall MRO problems. Acting as consultants, Grainger sales reps help buyers with everything from improving their supply chain management to reducing inventories and streamlining warehousing operations. So, how come you’ve never heard of Grainger? Perhaps it’s because the company operates in the not- so-glamorous world of MRO supplies, which are important to every business but not so important to consumers. More likely,

Wholesaling: Many of the nation’s largest and most important wholesalers—like Grainger—are largely unknown

it’s because Grainger is a wholesaler. And like most whole-

to final consumers. But they are very well known and much

salers, it operates behind the scenes, selling mostly to other

valued by the business customers they serve.

businesses.

Why are wholesalers important to sellers? For example, why would a producer use wholesalers rather than selling directly to retailers or consumers? Simply put, wholesalers add value by performing one or more of the following channel functions:

• Selling and promoting: Wholesalers’ sales forces help manufacturers reach many small customers at a low cost. The wholesaler has more contacts and is often more trusted by the buyer than the distant manufacturer.

• Buying and assortment building: Wholesalers can select items and build assortments

needed by their customers, thereby saving much work. • Bulk breaking: Wholesalers save their customers money by buying in carload lots and

breaking bulk (breaking large lots into small quantities). • Warehousing: Wholesalers hold inventories, thereby reducing the inventory costs and

risks of suppliers and customers. • Transportation: Wholesalers can provide quicker delivery to buyers because they are

closer to buyers than are producers. • Financing: Wholesalers finance their customers by giving credit, and they finance their

suppliers by ordering early and paying bills on time. • Risk bearing: Wholesalers absorb risk by taking title and bearing the cost of theft, dam-

age, spoilage, and obsolescence. • Market information: Wholesalers give information to suppliers and customers about

competitors, new products, and price developments. • Management services and advice: Wholesalers often help retailers train their sales-

clerks, improve store layouts and displays, and set up accounting and inventory con- trol systems.

396 Part Three | Designing a Customer-Driven Strategy and Mix