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Functions of Wholesalers : Transportation

 (4) Transportation : The wholesaler decreases the cost of transportation by buying in larger lots than is possible by the average retailer. A wholesaler furnishes other transportation services to his customers. The wholesaler assembles goods from a large number of scattered manufacturers and makes it accessible to the retailer. Thus quicker delivery is secured. Thus the retailers and industrial users need not carry large inventories. Consequently the costs are reduced because their investments in inventory, insurance and storage costs are lower. For the retailer, there is less risk- that the merchandise spoil or become obsolete and require markdowns.

(5) Warehousing: Te wholesaler also perform the storage function for the retailers create both place and time utility through their warehousing activities. They ordinarily have better storage facilities and can make more effective use of a given of space than the retailers. This enables them to warehouse at a lower cost. The warehousing service provided by the industrial distributors is of great value to the manufacturers and industrial users. For example, if an industrial user needs repair parts, he can get them quickly from the wholesaler and thus avoid a costly shutdown. Since the wholesaler can dovetail goods at various seasons of the year, the wholesaler is in a position to store merchandise more economically than many manufacturers can. The storing by the manufacturers of seasonal goods might be much more expensive than having the stocks of many manufacturers concentrated in the hands of a few wholesalers.

(6) Financing : The wholesaler allows credit to the retailers. The wholesalers aid their customers financially through open-book credit. They usually offer a cash discount if the customer pays 11;s bill within a given period of time after the date of invoice The financing activities of wholesalers also tend a retailer’s capital requirements and enable him to maintain a low inventory. In addition, on seasonal merchandise such as fishing tackle or Eid or Durga puja, X-mas items, wholesalers often deliver the merchandise in advance of the season but do  not require payment until after the season is under way. This the retailers purchase the goods of larger quantity on credit and sells the goods on a cash basis and then returns the amount to the wholesaler from the sales proceeds by driblet or after an agreed time.

The wholesaler’s customers benefit greatly from these financial services. In most cases, the manufacturers do not take the risk of granting credit to retailers and industrial users as they are far removed from them (producers), The wholesalers also directly assist the producers. They buy goods in advance of season or accept and store several shipments, paying for them well in advance of the time they will be resold to retailer,. They also help paying their bills promptly. The wholesaler, by purchasing, the goods in large quantities and stocking the same, locks up his capital and, therefore, the manufacturer needs not freeze his capital in the form of stored goods. Go Next

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