Wholesale Trade


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Wholesale Trade

 

a component of domestic trade; the initial stage of commodity circulation. Wholesale trade involves the movement of goods from manufacturers to retail enterprises or the movement of producer goods to their industrial consumers. Wholesale trade under socialism fulfills the marketing requirements of the national economy. It organizes the concentration of industrial and agricultural production and imported goods, the warehousing of goods, and the selection and combination of assortments of goods for distribution throughout the country in accordance with consumer demands. Wholesale trade also includes the purchase and sale of agricultural products and raw materials.

Wholesale trade in producer goods and wholesale trade in the objects of consumption are distinguished from each other by virtue of their respective position in the process of social reproduction. Wholesale trade in producer goods is organizationally separate from wholesale trade in consumer goods and constitutes a special sphere of circulation, that of material and technical supply. Commodity movement through wholesale trade is planned by the state in keeping with balances of the production and distribution of commodity resources. A precise delimitation of the functions of industrial enterprises and organizations, on the one hand, and wholesale trade, on the other, so that industrial enterprises are freed from trade functions and give almost all their production to wholesale trade organizations, eliminates duplication in marketing operations. This makes it possible to save time and reduce distribution costs, which in the early 1970’s comprised about 1.5 percent of the total turnover of wholesale trade in the USSR.

Wholesale trade in consumer goods in the USSR is basically concentrated in the system of the Ministry of Trade. It is implemented by eight specialized organizations or offices: Miasorybtorg, Bakaleitorg, Tekstil’torg, Torgodezhda, Obuv’torg, Khoztorg, Kul’ttorg, and Galantereitorg. (These organizations deal, respectively, in meat and fish, groceries, textiles, clothing, footwear, industrial goods, cultural amenities, and haberdashery.) The network of consumers’ cooperatives conducts its own wholesale trade through a ramified system of issuing depots, factory and oblast stores, offices, and cold-storage facilities. The activities of wholesale trade enterprises are based on contractual arrangements with manufacturers and retail trade organizations or enterprises. The volume, delivery timetables, and assortment of commodities supplied are defined in contracts. Through the system of contracts with manufacturing enterprises, the wholesale organizations influence the quality and assortment of completed output. Interrepublic and interoblast wholesale trade fairs play an important role in establishing links between industry and trade.

The technology of wholesale trade is being refined. Between 1961 and 1973 the amount of warehouse equipment increased by approximately 5–6 times. New, large wholesale-trade warehouses and cold-storage facilities, equipped with modern technology, are being constructed. In 1940 there were 105,000 all-purpose and specialized warehouses, with an area of 7.8 million sq m; in the early 1970’s there were 154,000, with an area of 25 million sq m. During the same period, the capacity of specialized commodity warehouses doubled, and this growth includes a nearly fourfold increase in area for cold-storage facilities.

Wholesale trade in foreign socialist countries is organized on principles analogous to those which govern its organization in the USSR.

Under capitalism, wholesale trade is an intermediate link between industrial and commercial capitalists as well as between commercial capitalists themselves. Large consignments of goods are bought and sold, but wholesale trading accounts for the final sale only of producer goods. The basic settings for wholesale trade are trade fairs; commodity exchanges, which are continuously functioning wholesale markets where the usual objects of sale are mass quantities of uniform-quality goods such as cotton, coal, and wood; and auctions, at which large-scale sales of agricultural products or furs are the main transactions.

With the development of capitalism, there is a decline in the importance of commodity exchanges as forms of wholesale trade. The exchanges are replaced by a ramified network of wholesale trade enterprises and by numerous marketing agents representing the monopolies. In developed capitalist countries the sale of raw and processed materials and ordinary equipment is conducted for the most part by wholesale firms. However, the sale of factory equipment or technical goods that require special servicing is carried out, as a rule, directly between manufacturers.

REFERENCE

Gogol’, B. I. Ekonomika sovetskoi torgovli. Moscow, 1971. Section on wholesale trade.

S. P. PARTIGUL

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