Define wholesalers. What are the functions of wholesalers?

Functions of Wholesalers: The word” wholesaler” is derived from the word “Wholesale” which means sell goods in large quantities or in bulk. According to S.E Thomas “A wholesaler is a trader who purchases goods in large quantities from the manufacturer and resells them to retailers in small quantities”.  

You may also define Wholesaler as the one who buys goods in large quantities from the manufacturer and sells them in small quantities with the object of earning profit. He, therefore, is neither a manufacturer nor a retailer but acts as a link between the two parties.

What is Wholesaling | Types and Importance of Wholesaler

Functions of a Wholesalers

The most important functions of wholesalers in the marketing of goods are as under:-

Assembling

The wholesaler buys goods from different manufacturers producing the same streak of goods. He assembles them in his warehouse for the purpose of sale to the retailers.

Storage

A wholesaler stores the goods in his warehouse.  He makes them available in appropriate and requisite quantities as and when they are required by retailers.

Grading and Packing

A wholesaler sorts out the goods according to their quality, size, shape, content, etc and then packs them carefully to sell them to the retailers.

Transplantation

A wholesaler buys goods in bulk from the producers and transports them in his own godown. The wholesaler also provides the facility of transportation to the retailer shop, which is one of the important functions of wholesale trading.

Financing

This is an important function of wholesalers. A wholesaler usually buys goods on cash from the producers and sells on credit to the retailer. In this way, he provides financing facilities to trade transactions.

Risk bearing

The wholesaler bears all the trade and financial risks of the business. Since he buys goods in bulk for making them available to retailers in small quantities, he takes all the risks involved in the marketing of goods. He not only assumes the risk of loss arising from an unexpected fall in the prices of goods but also the risks of damage, deterioration in quality, spoilage, etc in his warehouse.

Market Information

One of the most important functions of wholesaler is that it provides important market information to retailer and manufacturer, which help the retailers about the demand of consumer and manufacturer so that he produces the goods according to the changes in the tastes and fashions of the consumer.

Dispersing and selling

The wholesaler keeps the goods in the warehouse. He sells them to retailers who are often scattered over a large area. The retailers contact the wholesaler when goods are sold and this process continues over the years. The wholesaler thus helps in the dispersion process of marketing.

Characteristic of Wholesaler

The main characteristics of wholesaler are:

1. He buys and sells goods in large quantities.
2. He deals only with a few types of products.
3. He acts as a middleman between the producers and retailers.
4. He usually makes cash purchases and sells goods on credit to the retailers.
5. He does not sell goods to consumers.
6. He operates in a particular area determined by producers

Importance of wholesalers

The importance of wholesaler in our marketing system can better be understood by investigating as to how they serve the

1. Manufacturers
2. Retailers
3. Society

Manufacturers

The services which are provided by the wholesaler to the producers are as under:-

• Concentration on production
• Facilities large scale production
• Information about consumer behaviors
• Regulation of production
• Reliving producers from keeping stock
• Financial assistance

Retailers

The services which are provided by the wholesaler to the retailers are as under:-

• Relief from keeping a huge stock
• Financial help
• Not affected by price fluctuations
• Provision of information
• Transportation facilities
• Trade discount
• Benefit of specialization

Society

The services which are provided by the wholesaler to the society are as under:-

• Availability of goods to the consumers
• Stability in price
• Low in price
• Knowledge about new products