​State four consequences of eliminating wholesalers from the chain of distribution

State four consequences of eliminating wholesalers from the chain of distribution.                   (4mks)

Four consequences of eliminating wholesalers from the chain of distribution.

1. Manufactures may be forced to open up additional distribution outlets, which might increase their costs thereby lowering their profits.
2. The removal of wholesalers will in effect decrease the cost of distribution, hence higher profits to the producers.
3. Producers will not specialize since they will also be carrying out the distribution function, hence they will not enjoy the economic advantage of specialization.
4. Prices may be unstable in their absence since they help in stabilizing prices by storing large quantities of the produce.
5. Producers may need to establish additional storage facilities, which were previously provided by wholesalers, hence requiring them to raise more capital.
6. Retailers will be forced to buy in bulk thereby requiring them to have more capital, which may not be available.
7. Retailers may be forced to pay cash thereby requiring them to increase their capital base.
8. Manufacturers may be forced to break bulk, since the retailers may not be able to buy in large quantities.
9. Retailer may be forced to establish warehouse, which would require additional investment. 

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