Independent and voluntary group and cooperative wholesalers

Among the merchant wholesalers, there is still another distinction that must be made if the student is to get a rounded picture of this type of operation: the distinction between independent and voluntary group and cooperative wholesalers.
Purely independent wholesalers are merchants who buy for their own account from many manufacturers, and resell the goods in different forms and quantities to retail merchants wherever they can find retail buyers. The relationship between wholesaler and retailer is simply that of supplier and buyer. Both operate independently of each other. While these independent wholesalers far outnumber the other two types discussed, they do, on the average, less business per establishment.
Independent wholesalers have decreased in number materially over the years. Between 1929 and 1954, they decreased 42 per cent. While this has serious implications, the student of marketing must remember that the wholesaler exists because of the services he renders to the retail customers. One of the important services obviously is making it possible for the retailer to survive in competition with other forms of distribution, such as corporate chains, supermarkets, and discount houses. Obviously, these independent wholesalers have not been able to provide this service. Voluntary group wholesalers operate primarily in the grocery field. As the name implies, the association between wholesaler and retailers is voluntary. The wholesaler buys in large quantities as economically as possible, obtains advertising and other promotional allowances, and in turn obtains from  retailers a pledge that the retailers will purchase stated quantities of sup¬plies from the wholesaler.
Sometimes, the wholesale house extends management services to the retailers, such as accounting and advertising. The kind and amount of services rendered to retailers differ, and will influence cost. Many voluntary group wholesalers own and sell their own branded merchandise in competition with nationally advertised brands. This gives retailers affiliated with them an extra exclusive which makes such affiliation even more attractive.
Small retail stores predominate in the voluntary group movement, some 86 per cent of them doing less than the accepted minimum of established supermarkets (under $375,000 a year sales). And less than 3 per cent of the stores affiliated in voluntary groups do $1,000,000 or more a year. But their ability, through voluntary cooperation, to buy as cheaply as the chains, and to do certain group advertising and merchandising jointly, places them, despite their small size, in a position to compete with other retail food merchants on a more or less equal basis.
Cooperative wholesalers or retail-owned wholesale distributing houses are, as the name implies, wholesale houses, owned by the retailers who are joined together in the venture.
The number of retailers who normally join together to own their own wholesale house averages about 200. This kind of wholesale house has an annual revenue averaging $14,000,000. These retailer-owned groups are in a position to buy advantageously, to do joint advertising and merchandising and, in other ways, to compete on fairly even terms with the corporate chains. Retailer-owned cooperatives have grown consistently over the years, in spite of the natural turnover of member stores. Currently 20 per cent of the total food business is done through them. The number of $1,000,- 000-volume retail stores affiliated in retailer-owned cooperatives has increased over 550 per cent in the past ten years.
Again, the reason for the existence of these retailer- owned wholesale houses is service to the retailers at economical cost. Purchasing, advertising, warehousing, delivery, store engineering, managerial advice, floor displays and other services are regularly rendered to member retailers.
The average cost of doing business is considerably lower for retailer-owned wholesalers than for either voluntary group or totally independent full service wholesalers. Through national organizations, they, too, sponsor private or distributor-owned brands. And profits, if any, are distributed as dividends to the members