Home » Top 9 Important Function of a Wholesaler

Top 9 Important Function of a Wholesaler

The Wholesaler

The word “wholesaler” has been derived from the word “Wholesale” which means to sell goods in bulk or in relatively large quantities. According to S.E Thomas, “A wholesaler is a trader who purchases goods in large quantities from manufacturers and resells them to retailers is small quantities”. The wholesaler, thus, is one who buys goods in large quantities from manufacturers 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.

Characteristics of Wholesaler:

The main characteristics of wholesaler are,

  1. He buys and sells goods in bulk quantities
  2. He deals only in 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 the consumers.
  6. He operates in specific areas determined by the producer.

You may also like to Read:

Top 9 Important Function of a Wholesaler

The wholesaler performs a number of function in the marketing of goods. The important function performed by him are as under.

  1. Assembling

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

  1. Storage:

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

  1. 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 retailer.

  1. Transportation:

Wholesaler buys goods in bulk from the producers and transports them in his own godown. The wholesaler also provides the facility of transporting the goods from warehouse to the retailer shop.

  1. Financing:
    This is an important function of a wholesaler. A wholesaler used goods on cash from the producers and sells on credit to the retailers. In this way, the financing facilities to trade transaction.
  2. Risk bearing:

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

  1. Market Information

Wholesaler provides a valuable market in information to retailer and manufacturers. The retailers are informed about the type and quality of goods available on the market for sale. The manufacturers are informed about the changes in tastes and fashions of the consumer.

  1. Dispersing and selling:

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

9. Importance or advantages of wholesaler:

he importance of wholesalers n our marketing system can better be understood by investigating as to how they serve them.

  1. Manufacturers
  2. Retailers
  3. The society

These various services of wholesalers are now discussed under separate heads.

  1. Services of Wholesalers:

We can also be called advantages to the producers.

  1. Concentration on production:

The wholesalers provide full opportunity to the producers to concentrate on production activities. The producers need not have sale organizations. The supply of goods in small quantities is taken over by the wholesalers.

  1. Facilitates large scale production:

The wholesaler buys goods in large quantities from the producers. This facilitates the producers to produce goods in large quantities and avail of the economies of large-scale production.

  1. Information about consumers behaviors:

The wholesalers provide valuable information to the producer about the consumer behavior to the goods in the market, the changes in tastes and fashion and also the latest demands of the consumers.

  1. Regulation of Production:

The wholesalers normally place orders for the purchase of goods well in advance to the producers of goods. This helps the producers to plan and regulate their production as to how much and of which quality, the goods are to be produced.

  1. Relieving producers from keeping stocks:

The wholesalers normally make forward dealing with the supply goods with the producer. The producers are thus relieved of keeping the stocks and also the worry of a sale of goods.

  1. Financial Assistance:

The wholesaler may make an advance payment to the producers for the purchase of goods. They also provide soft term (at a low rate of interim loans to the producers.

  1. Services to retailers:

The wholesalers render the following services, to the retailers.

  1. Relief from keeping huge stocks:

The retailers can buy goods in small quantity from the wholesalers. They are thus saved by keeping large stocks with themselves.

  1. Financial Help:
    The wholesalers provide financial assistance to the retailer by selling goods on credit to them.
  2. Not affected by price fluctuation:

The retailers buy goods in small quantity from the wholesalers. They are, therefore, not effected by price fluctuation of goods in the market.

  1. Provision of information:

The wholesalers provide full information to retailers regarding the type, quality and price of goods.

  1. Information about new products:

The wholesalers provide full information to the retailers about the new products through salesman or price lists etc.

  1. Transportation Facilities:

The wholesalers help retailers to take advantage of goods from the wholesaler’s godown to retailer’s shop.

  1. Trade discount:

The wholesalers give trade discount on a purchase of goods to the retailers.

  1. The benefit of Specialization:

The wholesalers provide the benefit of specialization to retailers.

  1. Services to the Society:

    1. Availability of goods to the consumer:

Wholesalers make available the goods to the consumer according to their needs tastes, demands, fashions etc

  1. Stability in price:

The wholesalers maintain a stability of the price of goods by adjusting demand and supply.

  1. Low Price:

The consumers get goods at a low price level.

  1. Knowledge of new produce:

Wholesalers provide knowledge of new goods to the consumer.

If you want to learn more about Essential functions of a wholesaler you can visit.

About the author

Salman Qureshi

Salman Qureshi is an Accountant by profession & he loves to write on Commerce & Management Sciences Subject to assist Students. Hope you guys will like his effort.

Add Comment

Click here to post a comment