CBSE Class 11-commerce Answered

The company has two alternatives to distribute its products either through wholesaler as the middleman or to own multiple shops. Both alternatives have their own merits and demerits. However, owning multiple shops is a better alternative than the wholesaler setup because of the following reasons:

1. Multiple shops avoid middlemen because there is direct contact between the company and consumers. It is an opportunity for the company to stay away from wholesalers.
2. As the company is large sized, it has adequate financial resources to have its own shops. Hence, the company can avoid the middlemen in the distribution process. 
3. As the company is manufacturing bags—a durable commodity—multiple shops are the best way to channelise the distribution process.
4. Multiple shops approach the maximum number of consumers. Wholesalers may not find it profitable to deal with a new company producing bags, and hence, they will not take much initiative in this business.
5. Multiple shops can attract consumers in the market. Example: Baggit bag company
6. Hence, the company will prefer to have multiple shops to distribute its own product rather than through the wholesale dealer.