WW is a traditional wholesaler. It uses trade documents when selling goods to retailers.

Mark scheme

Marking points from the official mark scheme (May/June 2024). The mark or mark type is shown in brackets.

1. [1] (a)(i) Quotation / price list / catalogue
2. [1] (a)(ii) When goods have been overcharged or mistake made on invoice / goods have been returned / insufficient goods have been delivered / goods have been damaged or lost in transit
3. [3] (b) Answer = $8360
4. [1] (b) Method = $11000 – $2200
5. [1] (b) = $8 800 – $440
6. [4] (c) 1 mark for each reason and 1 mark for each explanation × 2
7. [1] (c) Wholesaler can provide a variety of goods
8. [1] (c) can meet their customer needs / whereas if a manufacturer was used, they would need to go to individual manufacturers / wasting time/money
9. [1] (c) Wholesalers provide storage of goods
10. [1] (c) e.g. seasonal goods / this saves space for the retailer / which the manufacturer would not do as space is needed for production
11. [1] (c) Convenience
12. [1] (c) as wholesaler is usually well situated / to provide retailer needs at short notice / whereas manufacturer could be located anywhere in the country/world
13. [1] (c) Breaking bulk
14. [1] (c) with bulk purchases split into smaller quantities / saving retailer expense of keeping large stocks / retailers do not have the capital to buy in bulk / do not want to buy in large quantities / they only have a small turnover
15. [1] (c) Wholesalers provide advice
16. [1] (c) e.g. market trends / have wide knowledge of the market / whereas manufacturers do not provide such expertise
17. [1] (c) Wholesalers will allow credit
18. [1] (c) can take the goods and pay later / so that the retailer can sell the goods before paying the wholesaler / if the retailer had bought from a manufacturer, they might have been expected to pay cash
19. [1] (c) Wholesaler provides delivery
20. [1] (c) saves on transport costs / so that retailers do not run short of goods / whereas manufacturers would not be able to provide this service
21. [1] (c) Wholesalers give trade discount/discount
22. [1] (c) enabling small-scale retailers to make a profit
23. [1] (c) Wholesalers can prepare goods for sale
24. [1] (c) e.g. packing / reduces costs
25. [6] (d) Up to 2 marks for describing wholesalers/retailers
26. [6] (d) Up to a further 2 marks for analysing whether wholesalers should act as retailers to reduce their decline
27. [6] (d) Up to a final 2 marks for evaluating whether wholesalers should act as retailers to reduce their decline.
28. [6] (d) Advantages: Larger market with potential to increase sales/profits
29. [6] (d) Advantages: Can promote their brands to wider customer groups
30. [6] (d) Advantages: Can build stronger relationships with consumers
31. [6] (d) Advantages: Can charge lower prices
32. [6] (d) Disadvantages: They would not want to compete with their own customers, that is the retailers who then might decide to use the services of another wholesaler.
33. [6] (d) Disadvantages: The wholesaler would need to have two different kinds of premises (one for the retailer in a shopping area and a warehouse on an industrial estate) this would increase costs, that the wholesaler might not be able to afford.
34. [6] (d) Disadvantages: Operating both would increase the workload, requiring different/more skills with extra staff being needed who would require training on customer service
35. [6] (d) Disadvantages: More deliveries will be required leading to higher transport costs.
36. [6] (d) Disadvantages: Wholesalers do not have a direct link with customers this would be time consuming to provide personal services
37. [6] (d) Disadvantages: Would need to provide extra services such as home delivery
38. [6] (d) Disadvantages: Lacks knowledge of the market to understand consumer wants
39. [6] (d) Disadvantages: Less convenient for public to visit if wholesaler is located further away than where public live and work
40. [6] (d) Evaluation: Wholesalers make money due to economies of scale. It means that the more products they sell the more money they make. This is due to the size of their margins. The margin is how much they make by selling each product. Wholesalers only make a small percentage markup per item, but sell a lot of items. Retailers on the other hand sell at a higher markup, but sell fewer items. Therefore, wholesalers won't make enough money if they sell to the public. The focus should be placed on these large orders for bulk wholesale, so that orders with a large amount or number of orders will make their business successful.