All You Need To Know About Wholesaling In Commerce
THE SERVICES OF THE WHOLESALER – The wholesaler acts as an intermediary in the chain of production between the manufacturer and the retailer. In some instances the manufacturer sells direct to the retailer but more often a wholesaler is used as he is able to provide several special services which are useful to both manufacturers and retailers. These include:
Breaking bulk: in which the wholesaler buys in large quantities from the manufacturer and sells in smaller quantities to the retailers. This is useful as many retailers are small units whose individual orders would be costly and inconvenient for large manufacturers to handle.
Transport: services which, without a wholesaler, the manufacturer would have to provide himself. This could be very costly. especially if the loads were small and the retailers widely disperse.
Credit: This is often advanced by wholesalers to retailers who often find this difficult to obtain from other sources.
Preparing goods: Further before sale to the retailer. This preparation includes such activities as grading and blending commodities. The wholesaler may also be responsible for packaging certain goods
Evening the flow of distribution: is important in industries where demand for the product fluctuates greatly throughout the year whilst it is desirable that production remain steady. The wholesaler is able to store goods during periods when production exceeds demand, for sale to the retailers when demand exceeds production.
Marketing information: is passed by the wholesaler to both the retailers and manufacturers on such matters as the relative success of particular products and display techniques that retailers can use.
TYPES OF WHOLESALER
Traditional wholesalers – may be large and serve the whole country or may be fairly small serving a local clientele. Some
encourage the customers to view and buy the goods in showrooms at their warehouse, while others employ salesmen to sell to retailers. The term factor is used to describe wholesalers who ever see or hold their goods but instead arrange their purchase and despatch on the telephone.
Cash-and-carry warehouses – place their emphasis on reducing
prices by having self-service, no credit, and having the customer
responsible for the collection of his goods. Their operations closely resemble those of supermarkets.
Retailer protection wholesalers – may be formed by groups of small retailers in order to allow them to buy in bulk with the price advantages and possible economies on transport and administration that this may offer. They are able to offer their members discounts, display services and advertising.
THE FUTURE OF THE WHOLESALER
The value of the wholesaler is often questioned. Many people argue that it would benefit producers and consumers alike if he were eliminated and his profits shared between them. However, it must be remembered that if the wholesaler were eliminated his services would still have to be provided and paid for and this might in fact prove more costly on the necessarily more fragmented basis.
The position of the wholesaler is weakest where retailers are large enough and find it worthwhile to run their own warehouses and to buy direct from the manufacturer. The trend towards branding and packaging by manufacturers has taken over one of the wholesaler’s traditional roles. The wholesaler’s position is strongest where there are many small manufacturers and retailers.