Distributive Trade II – The Wholesaler

Jack Prot

A wholesaler is a merchant who purchases goods in large quantities from the manufacturer and sells in small quantities to the retailers. The wholesaler is the middleman essential to the distribution of goods. There are several functions the wholesaler performs to the Manufacturer.

The wholesaler purchases goods in bulk or large quantity from the manufacturer and sells in small quantities to the retailers. They finance production by ensuring prompt payment to the manufacturer and this will facilitate production processes. They provide the necessary information to the manufacturer regarding the reailers’ and consumers’ views about the products. The views may concern changes in taste, fashion and defects. The wholesaler provides warehousing facilities to get rid of stock-piling at the production point. Goods are stored here until they are bought, hence it spurs the manufacturers to keep on producing. The wholesaler helps in carrying our product advertising and sales promotions and by so doing creates awareness for the products.

Furthermore, they help to prevent price fluctuation by stocking the goods until they are demanded. The wholesalers often provide transport needed in distribution and they send their vehicles to collect the goods from the manufacturers. The wholesaler can give credit facilities to the manufacturer, sometimes by paying upfront for the products. The wholesaler takes charge of the goods, thereby accepting responsibility for losses suffered in the course of distribution. The wholesaler takes charge of the goods, thereby accepting responsibility for losses suffered in the course of distribution. The wholesalers brand and package goods and received from the producers before selling to the retailers. They can advice the manufacturers on the market situations, eg, on the brand of goods needed by consumers. The wholesaler carries out market research to provide a two-way flow of information relating to market situations between the manufacturer and potential buyers. This assists in the marketing of current products and development of new ones.

Functions which the wholesaler performs to the retailer
1. Provision of variety of goods: The wholesaler enables the retailers to stock variety of goods, which they purchase from different manufacturers.

2. Provides Credit facilities: They allow retailers to buy on credit and pay for the goods later. This enables retailers to run their business with a small capital.

3. To advise the retailer: He can advise the retailer as a result of his expert knowledge of the goods. He can inform him about new developments in the market.

4. Makes goods available in small quantity: Wholesaler carries large stock of goods and divides it into small quantities in order to sell to the retailers.

5. Transportation services: The wholesaler can help to transport or convey goods to the retailer’s shop.

6. grading and packaging of goods: He puts finishing touches to production by grading, branding or repackaging of products before selling to the retailers.

7. Price stability: The manufacturer carries out this duty for the retailer by storing the goods in his warehouse and releases them according to the demand of the retailer.

8. Advertising of goods: By embarking on advertising or sales promotion, the wholesaler can help in creating awareness for the products on behalf of the retailers.

9. Risk bearing: The wholesaler bears the risk of fall in prices on behalf of the retailer by buying and storing of products in large quantities.

In summary, the wholesaler provides a ling between the producer and the retailer as information concerning the product flow from the producer through him to the retailer and hence a very important middle man in distributive trade and marketing.

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