Wholesaler: Meaning, Role and Functions

Wholesaler: Meaning

The business men who sell huge amount of goods are called wholesalers. Wholesalers sell goods to retailers by purchasing huge amount from producers. In other word, the person who performs the wholesale trade is a wholesaler. Wholesalers work as a bridge between producers and retailers. Such intermediaries do not
produce goods nor sell to ultimate consumers. The work of wholesaler, sometimes, may be done by producers or retailers. The producers work as wholesalers when they sell goods to industrial users, to government offices, to users, or other organizations. 

Wholesalers invest much capital and make arrangement for necessary warehouse/storing. So, such wholesalers are known as big businessmen. Such businessmen have their own warehouse for storage, means of transport and modern communication system. So, wholesaler or businessmen purchase goods in mass quantities transport them, bear risk etc. Wholesalers may also provide credit facility to their customers.

Different experts and scholars have defined wholesalers; the important are given as follows:
Prof. William J. Stanton has defined wholesaler as, “Wholesaling or wholesale trade includes the sale and all activities directly incidental to the sale of product or service to those who are buying for purpose of resale or for business use.”
Prof. Philip Kotler has defined it as, “Wholesaling includes all activities involved in selling goods or services to those who are buying for purpose of resale or business use.”
Peter D. Bennet has defined it as, “Wholesalers are the merchants who buy products from producers or other wholesalers and release them to retailers, organizational buyers or to other wholesalers.”
Wholesalers are of two types – agent wholesaler and trading wholesaler. Agent wholesalers work as the wholesalers but do not take the ownership of products. They only facilitate wholesaling on the basis of commission. Under agent wholesaler commission house, there are limited numbers of brokers wholesalers, workers, agents, sales agent, producers’ agents, auction company etc. Trading wholesalers take ownership by purchasing goods from producers. They conduct independent wholesale trading concern. Wholesalers include simple product wholesalers, simple line product wholesalers, and special product wholesalers.

Trading wholesaling includes five types of wholesalers such as full time workers, simple wholesalers, simple product line wholesalers, limited worker wholesalers, and postage order wholesalers, drop-shipment wholesalers and rack jobbers. Similarly, there are four types of wholesalers according to the extension of trade or on the basis of geographical region, such as local, regional, national and international. In this way, it becomes clear that the businessmen who sell goods/products to retailers, government and other organizations, and business users by purchasing in huge quantity from producers are called wholesalers. Sometimes producers and retailers also work as wholesalers. Wholesalers can be divided into different types on the basis of functional area and ownership. However, the main task feature of all types of wholesalers is to conduct wholesale trading.
Situation of Wholesalers

Role of wholesaler in distribution channel

Wholesalers conduct businesses investing huge capital in it. Besides, they also provide special types of facilities and services. Producers do not have to worry about sale of their products. Wholesalers have great role in distribution channel. The functions and roles of wholesalers are mentioned in short as follows:

1. Bulk buying

Wholesalers buy products in huge quantity from producers. Then the products are sold to retailers, government offices and organizations in small quantity. As the wholesalers become physically, financially and intellectually capable and knowledgeable about markets, distribution channels have proved very important. So, the wholesalers purchase products in mass/ huge quantity. As the scattered innumerable retailers buy goods from wholesalers but not directly from producers, wholesalers make bulk buying/ purchase in huge quantity of products.

2. Warehousing

Wholesalers also make effective arrangement for storing the products. Until the purchased goods are sold to retailers, they should be properly stored in warehouse. Such storage arrangement keeps the goods safe. Besides, it also stabilizes market price keeping balance in demand and supply.

3. Quick delivery

Wholesalers quickly deliver goods after they receive order from government offices, organizations, retailers etc. But, if all the buyers demand for goods/products from producers, they cannot deliver goods to all at the same time. As wholesalers become efficient in distribution, sufficient stock of goods remains with them. On the one side, there remains sufficient stock of goods and on the other means of transport remain ready at any time when needed. So, they can fulfill the demands or order of buyers immediately.

4. Financing

Wholesalers are capable intermediaries in terms of capital. They help producers by purchasing goods in huge quantity and paying bills immediately. Similarly, they provide goods to their regular retailers on credit. Because of credit facility, financially weak retailers can increase their business. As a result, sale quantity also considerably increases.

5. Order collection

At first the wholesalers store goods buying them in huge quantity and deliver the goods to the customers when demand or orders are received. Demands or orders should be collected for delivering the goods of different qualities and features. The task of collecting and scanning different orders and demands made by different retailers of different places, areas or regions is done by wholesalers. Hence, records of demands and deliveries also become ready.

6. Risk bearing

Wholesalers purchase huge quantity of goods from producers at a time. They also take ownership of the goods so purchased. If prices, fashion, demands and wants of customers for such goods change, all the goods may not be sold out. In such situation, the wholesalers have to bear the risks. Similarly, there also remain possibilities of damage, fire caught, robbery, stealing etc. of the stored goods. The wholesalers have to bear such risks. So, the wholesalers should also try to minimize such risks.

7. Promotion

Wholesalers remain in contact with government bodies, organizations and many other retailers. So, they believe the wholesalers. They purchase different goods from them believing in the wholesalers. Besides this, the wholesalers are also involved in advertisement with the producers and retailers. They give suggestions to retailers about exhibitions and decorations. If needed, they also know wants, interests, needs and desires of the consumers.

8. Expert advisor

Wholesalers become experienced, qualified and effective in wholesale job. Such sellers sell products through direct contact with government organizations, institution and retailers. So, they provide information about the consumer’s wants and interests to the producer. Thus, the wholesalers give valuable information as expert advisor.

9. Market information

As wholesalers are the important parts of producers, they keep various information and records. Besides, the wholesalers remain in close contact with retailers and markets. So, they provide information about the need of production/ product customers, competitors’ activities, price of products, new products and environmental changes etc. They also provide retailers the important information and notices received from producers.

10. Efficiency in distribution

Wholesalers become experienced in distribution. So, such sellers can perform wholesale and distribution more efficiently than the producers. They quickly deliver goods to the customers of target markets. This also cuts down the distribution cost. The wholesalers bring effectiveness in distribution; make available the right goods, at right place, at right time at lower cost.

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