Rack jobbers are a specific type of merchant wholesaler who provide merchandise and rack displays at retail locations. Unlike traditional wholesalers, rack jobbers own the merchandise they supply and display it in the retailers’ premises. They work cooperatively with retailers, typically sharing profits from the sale of these goods.
Key Features of Rack Jobbers
Merchandise Ownership
Rack jobbers own the inventory they supply to retail locations. This arrangement benefits retailers by relieving them of the financial burden of acquiring merchandise upfront.
Rack Displays
Rack jobbers provide and maintain display racks in retail stores. These displays are essential for showcasing merchandise effectively and driving sales.
Profit Sharing
A significant aspect of the rack jobber-retailer relationship is profit sharing. Rather than selling merchandise to retailers at wholesale prices, rack jobbers place their goods in stores and share the profits from sales with the retailer.
Historical Context
The concept of rack jobbing arose in the mid-20th century, coinciding with the rapid expansion of retail chains and department stores. This period saw increased consumer demand for a variety of products, which created opportunities for specialized wholesalers like rack jobbers to fulfil niche market needs efficiently.
Applicability
Rack jobbers are commonly found in industries where frequent inventory turnover and specialized product knowledge are crucial. Typical sectors include:
- Greeting cards
- Health and beauty products
- Books and magazines
- Licensed merchandise (such as toys and apparel)
Comparisons with Related Terms
Traditional Wholesalers
Traditional wholesalers sell bulk products to retailers at wholesale prices. In contrast, rack jobbers own the inventory and manage displays within the retail space, sharing profits from sales.
Consignment
In a consignment arrangement, retailers do not pay for goods until they are sold. Rack jobbing differs as the rack jobber owns and manages the inventory but shares the sales profits with the retailer.
Special Considerations
- Inventory Management: Rack jobbers are responsible for regular inventory checks and stock replenishment to ensure optimal product availability.
- Retail Relationships: Successful rack jobbers build strong, cooperative relationships with retailers to optimize merchandising and sales strategies.
- FF&BP (Frequently Found & Best Practices): Adapting to seasonal trends and consumer preferences is crucial for maximizing sales and satisfaction.
FAQs About Rack Jobbers
What types of products do rack jobbers typically handle?
Rack jobbers typically handle products like greeting cards, health and beauty products, books, and licensed merchandise. These items require regular restocking and specific display techniques to maximize sales.
How do rack jobbers make their profit?
Rack jobbers profit by sharing the revenue from merchandise sales with the retailer. The exact percentage split varies but is typically negotiated based on the type of merchandise, volume, and sales expectations.
Why would a retailer prefer to work with a rack jobber?
Retailers may prefer working with rack jobbers to mitigate upfront merchandise costs, benefit from specialized merchandising expertise, and reduce the burden of inventory management.
Are there any downsides to using rack jobbers?
Potential downsides include loss of direct control over certain product areas and reliance on the rack jobber’s ability to manage inventory and displays effectively.
References
- “Retail Buying Techniques” by John L. Ward.
- “Introduction to Wholesaling and Distribution” by Pamela Kraft.
- National Association of Wholesaler-Distributors (NAW).
Summary
Rack jobbers play a pivotal role in the supply chain by providing merchandise and rack displays to retail locations while owning the inventory. This model aids retailers by alleviating the need for upfront inventory purchases and helps maximize sales through profit-sharing arrangements. Understanding the historical context, key features, differences from traditional wholesalers, and practical considerations enables businesses to leverage the advantages of rack jobbers effectively.
