WHOLESALER AND WHOLESALE TRADE— MEANING, CHARACTERISTICS AND FUNCTIONS

A wholesaler is a person who buys goods in large quantities and sells them to retailers or end-users in smaller quantities.

A wholesaler purchases commodities and services for further resale or intermediate usage.

Wholesalers generally perform the activities of wholesaling, which is the bulk-buying of goods and services for sale to other traders or retailers in smaller quantities.

A wholesaler serves as an intermediary between the retailer and producer as they communicate retailer product feedback to the producer and vice versa

Wholesalers usually buy in bulk and sell in break-bulk to the retailers, small traders or even directly to the final consumers.

Characteristics Of A Wholesaler/Wholesale Trade

1. Bulk purchase: A wholesaler does not purchase goods in small quantities.

Rather, a wholesaler buys goods and services in bulk from the first producer or manufacturer.

2. An wholesaler buys goods from the manufacturer: In the chain of distribution, wholesalers are the ones who are closest to the manufacturer.

Because of this, wholesalers typically purchase goods and services directly from the producer.

3. Break-bulk sales: A wholesaler offers products to the retailer in smaller quantities

He purchases goods in bulk from the manufacturer and resells them to the retailer in break-bulk

4. A wholesaler has agents: Agents are used by wholesalers to deliver products to retailers and small business owners.

To make products and services easily accessible to the retailer, a wholesaler needs agents.

5. He is a Middleman: A wholesaler is a middleman because he serves as a go-between when a producer and consumer conduct business

6. Specialize in a few products: A wholesaler generally specializes in the sale and distribution of one or more related goods.

This way, he becomes popular in the sales of the goods and services in which he specializes.

7. Have storage facilities: A wholesaler usually buys in bulk, and in large quantities.

A wholesaler has a warehouse and other storage facilities because he purchases items in huge numbers, and he uses them to keep the products and services he has bought from the producer.

8. Large shop: Due to the scale of their operation, wholesalers generally have large shops where they sell goods in break-bulk to consumers over the cities.

A wholesaler may seek to locate his business close to the suppliers of his goods and services as well as his clients (retailers and industrial users).

Indeed, the location of a wholesaler shop is, to a large extent, determined by its closeness to the retailer and producer

9. Profit margin: The revenue a wholesaler earns is the difference between the price at which he buys a good from the manufacturer and the price at which he sells the goods to the retailer or consumer.

The profit a wholesaler makes, however, is the revenue from sales minus the costs of keeping and delivering those sales to the retailer's store.

10. Requires large capital: Wholesalers typically run large operations.

As a result, opening and running a wholesale firm requires a sizable amount of capital.

Functions of a wholesaler

1. Financing: A wholesaler provides a credit facility to the retailer and manufacturer.

A wholesale allows retailers to take possession of goods and pay after selling them.

This helps new retailers in the market who lacks enough funds to pay at once for goods and services purchased to purchase goods and pay latter.

2. Buying and assembling of goods: A wholesaler purchases products and services from various suppliers, assembles and packages them, and then resells them to the retailer.

3. Warehousing: A wholesaler stores goods and services produced by the manufacturers in his warehouse.

Because he buys in large quantities, a wholesaler must store some part of the goods and services pending the time when the retailers will need them.

The availability of a warehouse ensures that the goods are not destroyed by the lag between production and consumption.

4. Risk bearing: The wholesaler is responsible for taking on the risk of supplying goods to his warehouse and transporting those goods to retailers.

He assumes all commercial and financial risks entailed in the purchasing of items from producers and their delivery to retailers.

Wholesalers take on the risk of fluctuating prices, product destruction in their warehouse, and delivery risk to the retailer.

Furthermore, the risk of default of payment by the retailer also falls on the wholesaler.

5. Links the manufacturer and the retailer: The wholesaler links the manufacturer and the retailer.

Through the wholesaler, the retailer can provide product feedback to the manufacturer.

Similarly, the manufacturer can communicate product changes and updates to the retailer through the wholesaler

6. Transportation: Wholesalers provide transport facilities to retailers.

When a retailer buys products, the wholesaler may, out of convenience, transport the products to the retailer's store.

7.  Advisory service: The wholesaler advice both the retailer and the manufacturer

He advises the retailer on the type and quality of goods available in the market for sale.

he gives the producer advice on what products to make based on the demands and tastes of the market currently.

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