(2) Selling: The wholesaler is the “selling agent” of the manufacturers. He acts as the medium through which the goods produced by manufacturer is put into the hands of the retailer. Most manufacturers are small and have limited financial resources. Typically the executives are production or engineering oriented, not market-oriented. They can build a good product but they need someone to sell it. The wholesalers perform this service. The wholesaler performs the functions of finding a buyer, negotiating the terms of sale and transferring the title of the goods.
A wholesaler can afford to sell to the thousands of small scattered retailers because he represents many manufacturers and can carry many items. Consequently, he can usually get orders large enough to justify his widespread operations. The selling service performed by the wholesaler for the manufacturer is important for many reasons. First, each manufacturer in the absence of wholesaler would have to contact a large number of retailers. Secondly, the retailers arc scattered throughout the country and contact between such widely scattered retailers and the manufacturers would be very expensive. Finally, the retailers are so small that for the manufacturers to send salesman to call on them would be prohibitive because of the great cost.
The wholesaler’s service is very essential to of industrial goods. The industrial distributors products, know them better and are able to give each of them more attention. He provides a producer who has no marketing facilities, or who is manufacturing a narrow line and can not support a sales force, with an excellent means of reaching the market. This prestige which an established industrial distributor enjoys makes him an excellent middleman for introducing a new product.
(3) Dividing: This dividing is of’ equal value to the customers and to manufacturer. The wholesaler buys goods in carload lot; from a producer and sells them in case lot) or less. Because of transportation costs alone, manufacturers find it economically unjustifiable to sell in small quantities directly to retailers. By shipping in carload quantities, the transportation costs are computed at the carload rate. If the manufacturer had to ship in smaller quantities to the retailer, the much less than carload rate would be charged. Furthermore, many manufacturers refuse to sell in the less-than-car-load quantities and many retailers would not buy in the larger quantities.