Hello welcome to this blog on wholesale Trade in commerce:
Table Of Contents
- Meaning of wholesale trade
- Characteristics of wholesaler
- Functions the wholesaler performs to the manufacturer.
- Functions the wholesaler perform to the retailer.
Meaning of wholesale Trade
Wholesale trade or wholesaling: wholesaling is the business activity which entails buying of goods in bulk from the producer and selling a small quantities to the retailer and other merchants.
A wholesaler is a merchant who purchases goods in large quantities from the manufacturer and selling small quantities to the retailers. Wholesaling activities are essential in the channel of distribution.
Characteristics of a Wholesaler
There are three main characteristics of a wholesaler. These are:
- Breaking of Bulk: The wholesaler purchase goods in bulk or large quantities from the manufacturers.
- Sells in small quantities to the retailers: The wholesaler do sell the goods he purchased from manufacturers to the retailers in small quantities.
- Act as middleman: The wholesaler act as middleman between the manufacturers and the retailers.
FUNCTIONS OF THE WHOLESALER
Functions the wholesaler performs to the manufacturer:
- bulk breaking: The wholesaler purchase goods in bulk or large quantities from the manufacturer and sells in small quantities to the retailers.
- Financing: They finance production by ensuring prompt payment to the manufacturer and this will facilitate production process.
- Information dissemination: They provide the necessary information to the manufacturer regarding the retailers and consumers view about the products. The views may concern changes in taste, fashion and defects.
- Warehousing: The wholesaler provide 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.
- Advertising: The wholesaler helps in carrying out product advertising and sales promotion and by so doing great awareness for the products.
- Price stability: They help to prevent price fluctuation by stocking the goods until they are demanded.
- Provision of transport: The wholesaler often provide transport needed in distribution. They send their vehicle to collect the goods from the manufacturers.
- Credit facility: The wholesaler can give credit facilities to the manufacturer, sometimes by paying upfront but the product.
- Risk bearing: The wholesaler takes charge of the goods, thereby accepting responsibility for losses suffered in the course of distribution.
- Branding and packaging of goods: The wholesaler Brand and package goods received from the producers before selling to the retailers.
- Giving advice to manufacturers: They can advise the manufacturers on the market situations, e.g, on the brand of goods needed by consumers.
- Market research: 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 assist in the marketing of current products and development of new ones.
Functions the Wholesaler performs to the Retailer
- Provision of variety of goods: The wholesaler enables the retailers to stock veriety of goods, which they purchase from different manufacturers.
- Provide 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.
- 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 markets.
- Makes goods available in small quantities: Wholesaler carries large stock of goods and divides it into small quantities in order to sell to the retailers.
- Transportation services: The wholesaler can help to transport or convey goods to the retailer’s shop.
- Grading and packaging of goods: He put finishing touches to production by grading, branding or packaging of products before selling to the retailers.
- 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.
- Advertising of goods: By embarking on advertising or sales promotion, the wholesaler can help by creating awareness for the products on behalf of the retailers.
- Risk bearing. The wholesaler bears the risk of all in prices of behalf of The Retailer by buying and storing of products in large quantities.
- Links the retailer and the producer: He provides a link between the producers and the retailers as information concerning the product flow from the producer through him to the retailer.
Revision Questions
- State five functions performed by the wholesaler in the channel of distribution.
- Who is a Wholesaler?
- State the characteristics of a Wholesaler.
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