Functions of a wholesaler

A wholesaler provides useful services to both manufacture or producer and to the retailer also as follows:

Services to manufacturers

1. Bulk buying A wholesaler collects orders from large number of retailers. He buys goods in large quantities, therefore producers are seemed to be in trouble to collect small orders from a large number of widely scattered retailers.

2. Storage By buying goods in bulk, a wholesaler relieves the producers the burden of carrying large stock. producers do not have to make arrangement for warehousing.

3. Price stability / economies of scale Wholesaler stores goods during the stock season and do sell them during the period of peak demand by so doing, he prevents the violent fluctuations of prices.

4. Financing A Wholesalers makes prompt and sometimes pay in advance to the producer. therefore producer have to invest lesser capital in the business.

Services to retailers

1. Publicity and advice Wholesalers advertise their goods regularly, such publicity help the retailers in increasing their sales. some wholesalers also guide retailers in store layout and selling techniques.

2. Credit Wholesalers grant liberal credit facilities to retailers as a result, retailers can carry on a large volume of business ever with small capital.

3. Economies of scale Wholesalers operate in the large scale, therefore they can obtain heavy discounts and rebate from producers and freight costs. so retailers buy goods from wholesalers at the reasonable prices.

4. Price stabilization By regulating the supply of goods, wholesalers maintain stability in price which enable retailer to take a fair margin in profit. Wholesalers also help retailers to take advantages of favorable fluctuations in prices.

5. Protection from risk Wholesalers relieve the retailers from several risk by keeping huge stock and selling goods on credit. retailers now can bear less risk of price fluctuation and spoilage goods.

6. Information about new product A Wholesaler keeps in constant touch with producer, therefore he has up-to-date information about new product and new varieties of a existing products. He passes on such information to retailers.

7. Regular supplies Wholesaler stock variety of goods. by so doing he ensure that supplies to retailers are available at right time, right place and at reasonable price.

8. Elimination of wholesalers Wholesalers performs several useful functions and render many vital services. they provide a ready set outlets often to manufacturers and services as the source of stead supply of goods to retailer. therefore they provide a variable link between producers and retailers.

Some people insist that wholesaler exploit producer and retailer for this case they should be eliminated, and their function should be taken over by producer and retailer. The following are the arguments given in favour of elimination of wholesalers:

1. Rise in price Wholesaler charges the substantial margin of profit add to cost of distribution. this result into higher price payable by the ultimate consumer. hence price payable by consumer can be reduced by elimination of the wholesaler.

2. Manipulation Many wholesaler indulge in mal-practices such holding and adulteration. the push up the price by creating scarcity of goods such mal-practice can be eliminated by cancelling the function of wholesale

3. Faster distribution Wholesaler are more transfer agents wholesaler up unnecessary made block in the process of distribution. their interference in the distribution channel obstruct the smooth and quick flow of goods from producer to retailers elimination of wholesaler goods can be supplied to consumer very quickly Better alternatives: Large scale retailer such as chain store, departmental, supermarkets etc. have adequate fund and space to buy goods in bulk directly from producer. they can bear risk and promote sales on large scale therefore they do not need the services of wholesalers

4. Perishable commodities Hats to say when goods sold by wholesaler are perishable and cannot be stored for a long period of time

5. Purchasing by Order Incase retailers or consumers buy by ordering directly. This makes a wholesaler jobless

Those who believe that the wholesaler trade is essential give the following argument.

1. Storage of goods In case wholesalers are eliminated, have to maintain large stock and bear the risk of price fluctuations. but retailers are generally to bear this burden due to limited capital.

2. Seasonal products Some product are produced through out the year but their demand arise only during a particular season. if wholesalers are eliminated, producers will have to keep huge bulk of stock like rain coats.

3. Financing In case the wholesaler are eliminated, retailer will have to invest more capital in business

4. Necessary for small producers Small manufacturers or producer are not in better position in distribution of their product. Due to the large number of producers and retailer with small capital, wholesalers still dominate the field of distribution of goods

5. Undivided attention If wholesaler are eliminated. the producers will have to under take the distribution of his goods in the small lots to the large number of widely scattered retailers. as a result, he will not be able to concentrate fully in production.

6. Saving costs Wholesaler are expert in the task of distribution. therefore they take expenses through more efficient marketing of goods. they maintain sale forces which call up on retailers regularly. their expenses are lower than those of manufacturers who sell directly to the retailers by eliminating the wholesalers costs of distribution may increase.

By eliminating wholesaler, his function can not be eliminated. this function will have be performed by either producer / manufacturer or retailers Therefore the elimination of wholesaler is desirable only: In those case where producer or wholesaler can perform these function more efficiently than wholesalers therefore wholesalers are essential links in distribution of all such commodities where as producer and retailers are small and unable to consume the burden of wholesaler trade

1. By holding large stock and releasing them regularly, a wholesaler helps the consumers to get stead supplies through frequently replacement.
2. He plays an important role in keeping price stable which is obviously advantages to the consumers /public.
3. He helps to make the process of distribution be smooth.

The source from which a wholesaler obtains his supplies of course depends to the particular time of business but in general the source of supplies are as follows:

1. Home grower for perishable goods
2. Commercial sales e.g. coffee, tea, etc
3. Home manufacturers for manufactured goods
4. Import agent for over seas products
5. Products exchanged for commodities e.g. grains, material