10 Important Functions Of Wholesalers In Channel Of Distribution

Wholesale includes the sale and all activities directly incident to the products or services to those who are buying for purposes of resale or for business use. If the products or services are sold to the consumers, it can not be called wholesaling. Wholesaling includes sales of any firm to any customer except an ultimate consumer who is buying for personal, non-business use. The Functions Of A Wholesaler are given below:

The Different Functions Of A Wholesaler

(1) Buying : Wholesalers act as purchasing agents for their customers whether they are small retailers or industrial users. The wholesaler determines in advance what his customers will want and he has the merchandise on hand wren the customers are ready for it. The wholesaler is the retailer’s buying agent. The wholesaler meets all the requirements of the retailers.

(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. 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.

(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.

 (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.

(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.

(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 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.

(7) Risk-Bearing: The wholesaler makes it possible for the retailer to carry a smaller stock by holding goods in readiness near the retailer and by offering prompt delivery. This reduces the risk with price changes.  A wholesaler reduces a manufacturer’s risk by buying ahead. By storing goods and granting credit to retailers, he also performs the risk-bearing function.

(8) Management Services and Advice : The wholesaler renders an important service to the customers by providing market information and managerial advice. Some of the managerial services provided by wholesalers today include training of retail sales-clerk, advising on store displays and store layout, establishing better system of inventory control and accounting. T

9) Maintaining Price Stability: The wholesaler maintains a steady price by evening out price, movement. This is because he holds goods when the market is glutted with the goods due to over-production and releases stock when the market is rising.

(10) Supply of Best Products: The wholesaler through his long experience or purchasing goods, knows the producers who can supply him goods of the best quality and at the most favorable price. This sort of specialization enables him to help the retailers directly and the consumers indirectly by supplying the goods of best quality and at favorable price.

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