FUNCTIONS OF THE WHOLESALER TO THE MANUFACTURER AND THE RETAILER

A wholesaler buys goods in large quantities from the manufacturer and sells them in break-bulk to the retailer.

In the chain of production, wholesalers are one of the most important middlemen due to the functions they perform.

The functions a wholesaler performs can be grouped into two categories, namely: Functions of the wholesaler to manufacturers and functions of the wholesaler to retailers.

We'll examine wholesalers' function to manufacturers and retailers in this piece.

So, unwind and prepare to learn 😉

Functions of the wholesaler to manufacturers

1. Financial assistance: Manufacturers producing goods and services typically invest a lot of money in their operations.

To recoup the cost of production, the manufacturer will hope to receive cash payment for its goods and services, and a wholesaler does just that.

A wholesaler buys goods in large quantities from the manufacturers so that the manufacturers recoup the amount of capital invested in the production of a good or service.

2. Warehousing: Manufacturers generally produce on large scale and wholesalers buy in bulk.

As a result, a warehouse is required to store goods produced. A wholesale does this by storing goods in the warehouse pending the time when the goods will be demanded

Consequently, a warehouse is needed to store the goods produced by the manufacturer. 

A wholesale buys goods in large quantity from the producer and keep the goods in the warehouse until they are needed

3. Credit facilities: The wholesaler sometimes pays the manufacturer in advance for bulk orders.

This encourages the manufacturers to produce more goods and services.

4. Advises the manufacturers: The wholesaler is in direct contact with the retailer, who in turn has direct contact with the consumer.

As expected, the wholesaler provides expert advice to the manufacturers about consumer tastes and fashion.

He also informs the manufacturer of specific product features preferred by consumers.

Additionally, the wholesaler can inform the manufacturer of any product concerns made by the retailer.

He can also tell the manufacturer about current market conditions and the best strategies for outperforming competitors.

5. Facilitate production continuity: Since not everything produced is consumed right away, there is always a time lag between production and consumption.

The wholesaler ensures that the time lag is not felt by the manufacturer by buying goods in bulk from the producer and storing them till when there are needed by the retailers or consumers, thereby ensuring production continuity 

6. Bears risk: A wholesaler buys goods in large quantities, takes delivery of the goods, and stores them in his warehouse until his customers needed them.

Each of these activities carries its inherent risks, including the risk of price decline, the risk of product spoilage, the risk of theft, etc. etc. 

Without the wholesaler, all of these risks would have been borne by the manufacturers.

Hence, the wholesaler to a large extent relieves the manufacturer of some business risks.

7. Transportation services: The wholesaler also aids the distribution of goods and services

Often, the wholesaler sends his vehicle to collect goods from the manufacturers and then transports the goods to his shop or warehouse.

READ ALSO: HOME TRADE VS FOREIGN TRADE

Functions of the wholesaler to retailers

1. Provide credit facilities: Often, the wholesalers allow the retailer to take possession of goods and services, and pay for them after they are sold.

This allows new retailers with insufficient funds to purchase goods and services now and pay later.

2. Communicate product information: The wholesaler also provides retailers with information about the product

The wholesaler may receive information from the manufacturers about product modification and technicalities, which he then communicate the same to the retailer.

He may also educate retailers about new products, their features, prices, uses, and quality.

3. Transportation services: The wholesaler also provides transport services for the retailer.

For convenience, the wholesaler may offer to transport goods from his store or warehouse to the retailer's store.

4. Availability of goods: To provide variety to their clients, retailers must keep a sufficient supply of a variety of goods

The wholesalers make it simple for users to purchase goods from numerous manufacturers

5. Risk sharing: This is yet another important function of the wholesaler to the retailer.

The wholesaler eliminates the risk of theft, spoilage, obsolescence, and other risks associated with holding the items until they are needed by selling small quantities of commodities to the retailers

Without the wholesaler, such risks would be borne by the retailer, especially if the manufacturer does not have storage facilities.

6. Marketing support: To encourage consumers to purchase more goods and services, the wholesaler undertake advertising and other promotional activities 

The retailer also benefits from these marketing activities, as demand for various goods and services sold by the retailer is increased as well.

To conclude, the major function performed by the wholesaler is linking the retailers and the manufacturers.

The wholesaler performs this function by sending product information from the manufacturer to the retailer and sending product feedback from the retailer to the manufacturer.

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