The wholesaler is a link between producers and retailers. He may be said to provide the economic utilities of time, place and possession which may lead to economies in distribution. On the one hand he performs the services to manufacturers on the other retailers.
Table of Contents
Functions of Wholesales To Manufacturers
Financial Aid
Wholesalers often supply a more direct form of financial aid to producers. Wholesalers will buy in advance of a season or will accept and store several shipments, paying for them in advance of the time they will be resold to retailers.
Wholesalers also help by generally paying their bills promptly, thus further reducing a manufacturer’s capital requirements.
Market Information
Since the wholesaler is in touch with both retailers and manufacturers, he is in an ideal position to pass back information about what products are selling and what criticisms are being made. This will also be reflected in the wholesaler’s orders to the manufacturer, of course.
Reduction of the Cost of Distribution
As wholesaler is intermediary trader between the manufacturers, and the retailers, he has a two way traffic in the assembly and disposal of various products. This reduces the cost of transport and storage.
Buying in Advance of Demand
The wholesale trade must anticipate what customer will be buying in the coming months.
Buying ahead also provides a steady market for manufacturers.
Wide Operation
Most manufacturers are small and have financial resources. They can build a good product, but they need some one to sell it. The wholesalers perform this service.
He efforts to sell to small scattered retailers because he represents many manufacturers and can carry many items. Consequently, he can usually get orders large enough to justify his wide spread operation.
Function of Wholesalers to Retailers
Ware Housing
Storage is expensive as regard rent and wages. Neither manufacturers nor retailers are equipped to hold large stocks, nor do they want the expense and trouble through their warehousing activities.
If there were no wholesalers and retailers would be forced to carry these stocks with them which would mean so much inventory cost.
Credit Facilities
The wholesaler finances the retailer by grating him credit. He often derivers the merchandise in advance of the season but does not require payment until for his goods with the money he receives for selling them
By granting credit to retailers, the wholesaler is indirectly providing financial help to manufactures.
Minimum Inventories
The wholesaler consolidates retailers, purchases for them. Generally he buys and keeps on hand stocks from many manufacturers. The retailer can, therefore, order small quantities of anyone of many manufacturer’s products. By so doing shipping costs to retailers are greatly reduced.
Prompt Services
The wholesaler knows his community’s requirements so well that he purchases stocks for future delivery. This enables the retailers and their customers to obtain goods more promptly than would be possible if no wholesale supplies were at hand.
Lower Margin
Wholesalers buy and sell goods taking title to the goods, then deriving lower profit from the marginal difference between the price at which they buy and the price at which they sell.
Break Bulk
Wholesaler assembles a different kinds or products in large quantities from several manufacturers. Income trades, he breaks bulk, graders, sorts, packs or prepares good. He thus sells goods under his own brand name.
Reduction of Marketing Risks
Wholesalers usually guarantee the merchandise they sell and the retailer can thus get immediate satisfaction on claims involving defective merchandise.
Managerial Services
Some of the managerial services provided by wholesalers today include training or retail sales clerks, advising on, and helping with, store displays and store layout, and establishing better systems for inventory control and accounting.
Whole salvers can supply information regarding new products, competitors, prices, special sales by manufacturers and other data regarding market conditions.
Delivery
Wholesale firms hold a key position in the delivery of goods to retailer near to the retail market. He promotes the adjustment of equilibrium of demand and supply of a particular product. He thus helps to prevent the tendency of fluctuation in the prices of goods.
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