(a) Wholesale Trade:
Wholesale trade means buying goods in large quantities from the producers and selling them in smaller quantities to the retailers. Wholesalers act as an important link between manufacturers and retailers.
(b) Functions of Wholesaler
1. Buying and assembling:
The wholesalers buy goods from different producers and keep them in a central place.
2. Warehousing:
The goods are to be kept in the I warehouses till they are sold to retailers.
3. Grading and packing:
The goods purchased are sorted out on the basis of quality and size. This is called grading. After grading they are packed in attractive packages.
4. Pricing:
The wholesaler fixes the price of products.
5. Transportation:
The wholesalers move the goods from the production centre to the retail shop.
6. Risk bearing:
They assume the risk like change in demand, spoilage, theft during transportation, etc.
7. Financing:
Wholesalers purchase goods on a cash basis from manufacturers and sell them to the retailers on a credit basis.
8. Market information:
Wholesalers collect various market information for the benefits of manufacturers so that they can change the products accordingly.
Services of Wholesalers to Manufacturers
1. Facilitating large scale production:
As the wholesalers place bulk orders, the producers are able to undertake production on a large scale and take advantage of economies of scale.
2. Risk bearing:
Wholesaler deals in goods in their own name and bears a variety of risks such as the risk of falls in prices, theft, pilferage spoilage, fire, etc.
3. Financial assistance:
Wholesalers provide financial assistance to the manufacturers by making cash payment for the purchased goods.
4. Expert advice:
Wholesaler provides various useful information regarding customer preference, market conditions, etc to the manufacturer.
5. Help in marketing function:
As the wholesalers place bulk orders, it relieves the producer from many marketing activities and he can concentrate on production.
6. Storage facilities:
Wholesalers hold the goods in their own warehouses. It reduces the burden of storage of goods by the manufacturers.
7. Facilitate production continuity:
The wholesalers facilitate continuity of production activity throughout the year by purchasing the goods as and when these are produced.
Services of Wholesalers to Retailers
1. Availability of goods:
The wholesalers make the products of various manufacturers readily available to the retailers.
2. Marketing support:
They undertake advertisements and other sales promotional activities to induce customers to purchase the goods.
3. Grant of credit:
The wholesalers generally provide credit facilities to the retailers.
4. Specialised knowledge:
Wholesalers know the pulse of the market. They inform the retailers about the new products, their uses, quality, prices, etc.
5. Risk sharing:
Wholesalers sell goods to retailers in small quantities and thus retailers do not face the risk of storage, pilferage, reduction in prices, etc.
