Wholesale Trade

Wholesale trade refers to buying of goods in large quantity from producers or manufacturer for sale to other traders or buyers in small quantities. Those who are engaged in wholesale trade are called wholesalers. They act as a link between the manufacturers or producers and the small traders. Generally, they specialise and deal in one or a few products.

Functions of Wholesalers

  1. Assembling of Goods: Wholesaler purchases goods from different manufacturers and holds adequate stock.

  2. Grading and Packing: Wholesalers divide the goods according to their size, weight, shape and quality. In this way he prepares the goods in small lots for sale to retailers.

  3. Transporting: Wholesalers transport the goods from the production centers to his godown and from there to the retailers. Some wholesalers have their own vehicles for transportation of goods.

  4. Warehousing: Wholesalers keep the stock for retailers in the warehouse so as to make available goods to the retailers whenever they need them.

  5. Financing: Wholesalers buy goods from the manufactures and sometime make advance payment. They sell goods to retailers on credit. In this way they finance the manufactures as well as the retailers.

  6. Risk Bearing: Wholesaler bears the risk of changes in demand during storage. He also bears the risk of damage of goods, risk of bad debt, etc.

  7. Providing Market Information: Wholesaler collect information about changes in the taste, fashion, buying habits etc. of consumers from the retailers, then they pass this information to the manufacturers, so that the manufactures may produce goods according to the requirements of the consumers.

  8. Selling: Retailers are widely scattered all over the country. Many wholesalers employ sales persons to take orders from retailers. Thus, the wholesalers help in selling goods.

Services Provided by Wholesalers

Wholesalers provide services to the manufacturers and the retailers.

1. Services to Manufacturers

Wholesalers render the following services to manufacturers:

  1. Bulk Buying: Wholesalers collect orders from a large number of retailers and buy goods in large quantities from manufacturers.

  2. Warehousing Facility: Wholesalers relieve the manufacturers from storing function by holding large stock of goods in their own warehouse. Therefore, manufacturer is relieved of the function of warehousing.

2. Service to Retailers

  1. Regular Supply: Wholesalers keep a large stock of goods for retailers. They ensure that the goods are available to retailers at all times. In this way they maintain regular supply of goods to the retailers.

  2. Financial Help: Wholesalers generally sell goods to retailers on credit. The retailers will make payment to wholesalers on the basis of the sales made. So with less capital they can easily manage the business properly.

  3. Advertisement: Wholesalers advertise their good regularly. So, the process of selling goods becomes easy for retailers.

  4. Market Information: Wholesalers provide up-to-date information about new product to the retailers. Wholesalers advice retailers on matters like price, quality and time of purchase.

  5. Risk Protection: Wholesalers keep huge stock of goods and sell to retailers on credit. As a result, retailers have to bear low risk.