SPPI FOR WHOLESALE TRADE IN ISRAEL

SPPI FOR WHOLESALE TRADE IN ISRAEL

Ruth ViznerCentral bureau of statistics

23rd Voorburg Group meetingAguascalientes, Mexico

22-26 September 2008

Topics Output definition Market condition Classification National accounts Pricing methods Quality adjustment

Definition of the service (1) The resale (without transformation) of goods

from manufacturer to a third party: retailers, industrial, commercial, institutional or professional users or other wholesalers, or involves acting as an agent or broker in buying goods for or selling goods to such companies.

Definition of the service (2) Related services Transportation Warehousing Promotions Marketing Packaging Assortment building Other services

Definition of the service (3)

Two types of wholesalers: Merchant wholesalers Buy and sell goods on their own account

(wholesale merchant or jobbers, industrial distributors, importers, exporters and cooperative buying associations)

Agents and brokers Receive a commission or fee

Type of wholesalers

Agents and brokers Wholesale merchants

Wholesale on a fee

or contract basis

Wholesale that take title

to the goods

Manufacturer’s sales and branch offices

Origin and destination of goods

Wholesale trade

Local manufacturer

International manufacturer

Intermediate buyer:

RetailerIndustrial

institutionalOther merchant

Final Customer

International customer

import

export

Market Conditions (1)

In 2007 Industry revenue US$ 55 billion 22,733 dealers 17.7 percent of revenue in all industries Market share of big companies ~70% (3.5 percent of dealers with revenues US$ 40+ million

accounted ~ 70% of revenue)

Market Conditions (2)Wholesale trade includes domestic as well as

international wholesale tradeIn 2005 Import of goods ~ 25% of revenues Export of goods only ~ 4% of revenues

First group to develop512 - “wholesale trade of agriculture raw material, live

animals, food, beverage and tobacco”5121 - Wholesale of agricultural raw materials and live animals

includes: grains and seeds; oleaginous fruits; flowers and plants; unmanufactured tobacco; live animals;hides and skins;leather; agricultural material; waste, residues and by-products used for animal feed

5122 - Wholesale of food, beverages and tobacco includes: fruit and vegetables; dairy products, eggs and egg products; edible oils and fats of animal or vegetable origin; meat and meat products; fishery products; sugar, chocolate and sugar confectionery; bakery products; beverages; coffee, tea, cocoa and spices; tobacco products

Group 512

In 2005 The biggest, ~ 27% of revenue US$ 11,591 millionSpecial conditions Fluctuations in the prices of goods in global markets Changes in exchange rates Competition Mergers and acquisitions Globalization and new technologies

ClassificationISIC Rev 3

51Wholesale trade511Wholesale on a fee or contract basis512Wholesale of agricultural raw materials, live

animals, food, beverages and tobacco513Wholesale of household goods

514Wholesale of non-agricultural intermediate products, waste and scrap

515Wholesale of machinery, equipment and supplies

519Other wholesale

other Classification (ISIC Rev 4)

46Wholesale trade461Wholesale on a fee or contract basis462Wholesale of agricultural raw materials and

live animals463Wholesale of food, beverages and tobacco464Wholesale of household goods 465Wholesale of machinery, equipment and

supplies 466Other specialized wholesale 469Non-specialized wholesale trade

other Classification (CPC)

611Wholesale trade services, except on a fee or contract basis

6111of agricultural raw materials and live animals6112of food, beverages and tobacco6113of textiles, clothing and footwear

6114of household appliances, articles and equipment6115of miscellaneous consumer goods

6116construction materials and hardware

6117of chemical and pharmaceutical products6118of machinery, equipment and supplies6119of other products

Classification

Detailed information and description of products and services.

Distinction between wholesale trade on own account and on a fee or contract basis.

Classification according to the function and kind of product (food, household, machinery).

Distinction between specialized and non specialized wholesale trade (in ISIC rev 4).

National accounts issues How to measure prices of output for

subsidiaries units of a manufacturing enterprise? (Units that sell manufactured products made by the parent company ).

How to estimate export in wholesale trade ? (export of services / export of goods).

Pricing methods

Gross margin price. The difference between the acquisition price from the supplier

and the selling price to the next buyer. There are some cases:(I)  the average gross margin per unit for a particular customer class

and/or supplier class for all sales within a product group.(II)  the average gross margin per unit for a particular customer class or

supplier class for a specific kind of product.(III) the average gross margin for all customers and/or suppliers for all

sales of a particular product.(IV)  the average gross margin for all customer and/or suppliers for all

sales of a product group.(V) margin price for an item / transaction.

Margin Price

unitbuyt

unitsellt

unitt

avgbuyt

avgsellt

avgt

buyt

selltt

PPMP

PPMP

PPMP

,,

,,

Quality adjustment methodologyPrice determining component include Product information - Type of product - Unit of measure - Origin of product - Additional services Transaction information - Type of costumer - Type of supplier - Size of transaction

Example of service descriptioncomponentBuying priceSelling price

productFeed wheatFeed wheat

Unit of measure1 ton bag1 ton bag

Supplier/ costumerRussian wheat company

Israel Wheat mill

Country originRussia Russia

Size of transaction1 container

Additional services WarehousingDistribution

Another examplecomponentBuying priceSelling price

productMilka milk chocolate package

Milka milk chocolate package

Unit of measure100 gr100 gr

Supplier/ costumer

Kraft companyChain store

Country originBelgiumBelgium

Size of transaction

1000 packages

Additional services

MarketingCo-op PromotionDistributionWarehousingProduct management