A group of small grocery shops forms a new business entity to buy products directly from manufacturers.The group buys products in bulk which are then distributed among members.This helps the shops obtain better profit margins.Which of the following types of vertical marketing systems can be observed here?

Question

Quizplus · Accepted Answer

In a contractual VMS, independent firms at different levels of distribution work together through contracts to coordinate their activities and obtain greater efficiency and economies of scale. In this case, the group of small grocery shops has formed an entity to buy products directly from manufacturers and distribute them among the members, which is a clear example of a contractual VMS.

A Group of Small Grocery Shops Forms a New Business