Focus of the week- Business
Topic- What should I look at for when choosing a location for a wholesaler business.
Writer- Iyere Joy
Being a form of business that requires bulk purchase and breaking the bulk into smaller unit that the retailer are able to buy for resale shows that wholesale business is an intermediary between the producer and the retailers. At this strategic position, the wholesaler locates market, encourage mass production and provide information on the product mass production and provides information on the product from the manufacturers to the retailers. There are specific factors that determine where the wholesale business can be located.
Accessibility to retailers- The wholesaler warehouse must be located in an area which the retailer can access easily. The warehouse may not necessary be in the highly commercialized area but is must be conspicuously located away from traffic congestions that could hinder the free flow of retailers to and from the warehouse. This accessibility will be the retailers to transact with the wholesaler at less risk, low cost of transportation and full assurance of availability of the required wares.
Proximity to the source of supply- Doing business requires taking advantage of certain synergy as opportunity for profitability. Such synergy could be a choice of location that will conveniently offer continuous supply of product to the warehouse of the wholesaler. Either direct supply by the company or arranging for the supply by the wholesaler will be located both to the inlet(from the producer) will be enhanced if it is convenient for the supplier to supply over a short distant at a low transport cost over the shortest period of time.
Proximity to the means of transport- since the product received into the warehouse are bulky, the wholesaler must be located close to a means of transportation, for example , close to the airport, rail way, and motor packs. This becomes very attractive to both suppliers and retailers who will not waste much time arranging transport. The wholesaler will also benefit from this enormously since the location will not encourage increase in transport cost that could have led to high price of products.
Availability of large premises- An expand of land or warehouse that could accommodate the bulky wares or products, part process, breaking the bulk into smaller unit and attending to a large number of retailers as well as suppliers without much delay. The function of wholesale will effectively be carried out once the space is conducive to accommodate trucks and other big vehicles
Proximity to financial institution- Wholesale business is full of risk since it involves handing of both fragile and perishable goods. At the same time it require the handing of huge sums of money as a characteristic of the business in focus. As such financial institution like banks and insurance houses are of paramount important to the wholesalers to take advantage of their services. The wholesaler must be located close to these institutions.
Availability of security agent- Unlike retailers who can easily sell off their wares, the bulk purchases and regular demand from retailers do not allow the wholesalers warehouse to be empty. Goods are continuously available at the warehouse. This requires that attension must be drawn to such warehousing for security reasons. It will add to the cost of goods if the wholesaler has to hire full scale security guard without a complementary effort from public security agent. Thus, the wholesale business should be located close to police station or other security agent. This location will encourage suppliers to supply goods and retailers to transact business with the wholesale business.