Wholesale Trade refers to buying and selling goods and services in bulk quantities for resale or intermediate use. Wholesalers play the role of middleman between manufacturers and retailers. They extend their support to manufacturers and retailers by making the products available to the retailers by acting as a medium between them and are responsible for providing both time and place utility. Some of the services offered by wholesalers are:
Services offered by Wholesalers to Manufacturers:
1. Facilitating Large Scale Production: Wholesalers collect small orders from a large number of retailers and pass those orders to the manufacturers, and after production, make purchases in bulk quantities. This helps manufacturers to be confident and accurate about the scale of production that is needed at times.
2. Bearing Risk: Wholesalers bear a lot of risks as they collect the orders in their name, purchase goods in bulk, and take responsibility for goods delivered to them. They relieve the manufacturers from the risks associated with falls in price, theft, spoilage, fire, etc.
3. Financial Assistance: Wholesalers generally make cash payments to the manufacturers for the goods ordered by them. It enables manufacturers to work smoothly as their capital is not blocked in stocks. Sometimes, they advance some amount of money to the manufacturers also with the bulk orders placed by them.
4. Expert Advice: Due to being in direct contact with the retailers, wholesalers are in a position to advise manufacturers about the customer’s taste & preferences, market conditions, competitive activities, etc.
5. Help in the Marketing Function: Wholesalers are in direct contact with the retailers who are in direct contact with a large number of buyers. By this, manufacturers are relieved from many marketing activities, which enable them to concentrate on the production activity.
6. Facilitates Continuity: Wholesalers facilitate continuity of production activity by purchasing goods regularly throughout the year from the manufacturers. Due to continuity in purchasing, manufacturers are free from storage problems and uncertainty.
7. Storage: Wholesalers also facilitate in providing storage to goods ordered. By sending them directly from the factory, manufacturers are relieved of the burden of providing storage facilities for the finished goods.
Services offered by Wholesalers to Retailers:
1. Availability of Goods: The wholesalers make products available for retailers so that retailers can maintain adequate stock of varied commodities to offer consumers a variety of products. When products are available all the time to retailers, they are free from keeping big inventories.
2. Marketing Support: Wholesalers supports the retailers by undertaking advertisement and other sales promotional activities to induce customers to purchase goods. By this, retailers can focus on selling products and not on marketing and other business activities.
3. Grant of Credit: Wholesalers give credit facilities to their regular customers, which enables the retailers to manage their business with relatively small capital. Retailers often pay the wholesalers after their goods are sold to the end consumers, and by this, they can continue their business with small working capital.
4. Specialized Knowledge: Generally, wholesalers deal in one line of products which makes them specialized in knowing the pulse of the market. They pass on this benefit of specialized knowledge to retailers.
5. Risk Sharing: Retailers are able to purchase goods from wholesalers in smaller quantities, and by this, they can avoid the risk of shortage, obsolescence, and demand fluctuation in the market. Retailers are small business units that cannot bear heavy risk all alone.
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