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| Russian
Federation |
| Marketing
and Distribution |
Channels of Distribution for Consumer Goods in Moscow
Commercial products arriving on the Moscow market may use various
channels of goods movement.
Goods of foreign producers arrive in Russia and Moscow mainly under
the contracts through importers, while others are imported via the
so-called 'shuttle business'.
Some products, mainly those of a technological nature are distributed
directly between producers and consumers.
Internal channels of distribution comprise both wholesalers and retailers,
with the sale carried out by agents, consumer cooperatives and, exchanges.
The trade practices indicate that the variety of wholesale structures
reflect different incentives of manufacture of promoted goods.
Importers - Exporters
The following groups can be singled out among the importers-exporters.
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Large state industrial enterprises
and concerns which have come at present to undertake
independent activities in the foreign market, having created
specialized foreign-economic associations; |
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Foreign-trade companies and
associations for the most part that has become joint-stock
companies, but for the moment they operate under the control
of the Ministry of Foreign Economic Relations and carry out
a great part of the orders coming from the state administrative
structures; |
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State importers
actively engaged in the import of food items to Moscow are operating
under the direction of the Moscow city government. They are
as follows: the Moscow food items contract system - the state
enterprise (SE) "Mosprodkontrakt", the foreign-economic
trading house "Agrointorg" and the Moscow fair centre
"Mosprodyamarka" |
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Commercial structures
including numerous privatised and newly created small companies
for the most part; |
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Mixed companies with foreign investments
(joint ventures and companies relying upon 100% backing from
the foreign investors). |
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It is the commercial structures that hold the leading position with
regard to the total number of import transactions. Being dynamic,
they rapidly react to the consumer demand and actively import goods
of a wide range, i.e. food items, audio-video equipment, alcoholic
beverages, household electric appliances, furniture and drugs.
Wholesalers
At present, both state and private companies are operating in the
wholesale trade.
The state structures on the instructions of the Federal bodies of
power, undertake wholesale purchases of some types of products in
line with the state and city needs, on the basis of a competitive
selection of suppliers, including both producers and intermediaries.
For example, it is the municipal enterprise "Glavsnab
of the Moscow City Government" that handles purchases
and sales of the material and technical resources for the needs of
Moscow.
Glavsnab cooperates with 40 regions of the Russian Federation, 10
republics of the CIS, as well as with the Baltic republics.
The purchased material and technical resources are sold from the storage
facilities of the enterprise and through wholesalers.
The goods are also delivered to Moscow via the channels of the inter-regional
co-operations.
Agents
Distinct from the wholesale commercial organizations, the agents are
private intermediaries who, as a rule, don not invest their resources
in acquisition, storage and transportation of the goods. Their functions
include the search for an establishment of the commercial contacts
between the producer and buyer and participation in a trade deal.
The agents are working on contractual conditions with the producer
or owner of the large wholesale batches of the goods (as an intermediary).
The commission carried by the agents usually depends on the size of
the concluded deals and as a rule, amounts to 1-5% of the value of
the deal. In some cases it may reach 20-30% (for example, when the
producer sells the new products that is not peculiar to him with respect
to which the sales market has not been studied).
Both legal entities (usually these are the joint-stock companies,
limited partnerships and other commercial structures) and physical
persons can act as trade agents. The heavier tax is imposed on the
profit gained as a result of the intermediary activity that carried
as a result of the supply and sales operations.
Commission Agents
The commission agents are engaged in the sale of the goods without
obtaining the right of ownership. The size of the commission depends
on the nature and volume of services that accompany the sale of the
goods (for example, the storage, transportation of the goods) and
equals 10-30% of the value of the goods.
In the filed of the retail trade up, consumer goods and food items
about 10% of the entire amount of the trade turnover accounts at present
for the sale "by way of free trade" by the physical persons.
About half of these people are commission agents for various wholesale
structures or "shuttle" tradesmen.
Sales through representation of producers
In connection with a sharp reduction of the share of the government
in the order book of the enterprises, the most part of the latter
are searching for the customers. Therefore, the considerable part
of the total volume of the trade turnover accounts for the so-called
"direct links". At present, the sale of
goods by the producers themselves without services of the wholesalers
and intermediaries in the total volume of sales of the producers,
amounts to about 80% with respect to the products of the technological
nature and 20% for the consumer goods. The enterprises can sell their
products via two channels:
Under the contracts
concluded as a result of direct long-time economic links;
Through the
producer's wholesale subunits.
In particular, many enterprises have export departments designed for
selling the products abroad.
Other sales channels
A share of the wholesale turnover is carried out on the commodity
exchanges specialized in a certain kind of product (for example,
cereal soil). The commission paid in favour of these exchanges, as
a rule amounts to 0.1-0.5% of the total amount of the transaction,
whereas the broker's commission varies on average from 1 to 5% depending
on the volume of the transaction (the greater the volume, the lower
the commission)
However, at present the exchange business is not of primary importance
in the commodity turnover and many consumers use the exchange mainly
as a source of the information about prices.
Some consumer goods of the import production come from abroad through
"non-organized" intermediaries - the so-called
"shuttle flights". As a rule, this concerns the cheap goods
to satisfy the mass demand. These goods are usually brought from such
countries as Turkey, China, Korea and Vietnam. According to estimates
of some experts, coming through the channels of the "shuttle
business" to Russia are about 70% of the inexpensive clothing
imported from abroad, the bulk of the cheap bijouterie, about half
of the leather goods, 30% of the audio-and video equipment. |
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