Since, present government policies on Foreign Direct Investment (FDI) in India do not allow majority investment in front-end retail operations for multi brand retail retail store chains, big retailers like Wal-Mart, Carrefour and Tesco are exploring feasibility of entering the retail sector through what are known as ‘Cash and Carry wholesale’ and other back-end operations like supply chain and logistics management. While Metro AG of Germany is already in this business in India having opened its office in Hyderabad, Wal-Mart has just signed an agreement with Bharati Enterprises to enter this segment.
There is hardly any clarity, however, on what is ‘cash and carry’ wholesale trade? Is it same as good old wholesale business or it has finer nuances? Since this term is now being freely tossed around in media reports and business discussions, here is a quick take on: what is cash and carry wholesale?
Cash and carry wholesale represents a type of operation within the wholesale sector.
Its main features are summarized best by the following definitions:
- Cash and carry is a form of trade in which goods are sold from a wholesale warehouse operated either on a self-service basis, or on the basis of samples (with the customer selecting from specimen articles using a manual or computerized ordering system but not serving himself) or a combination of the two. Customers (retailers, professional users, caterers, institutional buyers, etc.) settle the invoice on the spot and in cash, and carry the goods away themselves. —Eurostat (the European statistics authority).
- Though wholesalers buy primarily from manufacturers and sell mostly to retailers, industrial users and sub-wholesalers, they also perform many value added functions, including selling and promoting, buying and assortment building, bulk-breaking, warehousing, transporting, financing, risk-bearing, supplying market information, and providing management services. — OECD (Organisation for Economic Cooperation and Development)
- There are significant differences between “classical” sales at the wholesale stage and the cash and carry wholesaler: These differences are based in particular on the fact that customers of the cash and carry wholesaler arrange the transport of the goods themselves and pay the goods in cash and not on credit. — EU Commission Decision 20/11/1996.