WHOLESALE TRADE
This is the trade which involves the buying of goods in large quantities from a manufacture and selling them to the other traders i.e retailers rather than consumers.
A wholesaler is the person who buys goods on bulk from manufacturers and sells them to retailers. The main role of wholesaler is “bulk breaking “i.e. buying goods in large quantity and selling them in relatively small quantity to retailers
BROAD FEATURES OF WHOLESALER
- Is neither a producer nor retailer but act as a link between the two person i.e. producer and retailer.
- He generally specialize on the commodities.
- He doesn’t deal directly with consumer but sell through retailer.
- He requires huge capital to conduct the business.
- He buys in bulk but sells in relatively small quantities to retailers.
- Usually he keeps his stock of goods in the go down rather than in the shop.
- He gets profit mainly due to trade discount rebutes or cash discount granted by producers.
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FUNCTIONS OF A WHOLESALER
A wholesaler perform the following functions in the process of making goods
- Buying and assembling
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Wholesalers collect the agricultural goods in small quantities from small scale farmers (producer) and store them in the warehouses. He normally assembles goods from various producer so as a retailer may be able to buy what he wants from him at a right place, price, and time, quality and quantity.
- Warehousing
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Wholesaler keeps a large stock of goods for retailer, he ensure that the goods are available to retailer at all time.
The wholesaler helps to stabilize price by adjusting supply according to the demand.
- Grading , packaging and branding
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Many wholesaler sort out goods according to size , shape ,quality etc they break goods into small lots re pack them and put their own branch names in this way the perform by grading and standardization, they ensure supply of uniform quality to retailer.
- Financing
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Wholesaler provides finance to manufacturers / producer and retailer. They often buy goods from producer on cash basis and even make advance payment. Wholesaler generally sells goods to retailer on credit basis.
- Dispersing
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A wholesaler distributes the assembled goods among retailer scatered all over the country . sells goods in small lots to retailers according to their advice.
- Transport
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Wholesalers provide facilities for transportation of goods from the producer to their own godowns.
- Risk bearing
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A wholesaler serves as a stock absorber. He bears a risk of change in demand and damage of goods when in transit and during storage , also the risk of bad debts by granting creadits to the retailer, a wholesaler therefore face many risks by buying bulk and storing goods in bulk.
- Market information
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A Wholesaler forecasts the market condition. He collects information from retailers about change in tastes , fashion , buying habits of the consumers and passing them to producer. some wholesalers advice the retailer on which goodwill satisfy the needs of the consumers and at what price .
SERVICES RENDERED BY A WHOLESALER.
A wholesaler provides useful services to both manufacture or producer and to the retailer also as follows:
SERVICES TO MANUFACTURERS
- BULK BUYING
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A wholesaler collects orders from large number of retailers. He buys goods in large quantities, therefore producers are seemed to be in trouble to collect small orders from a large number of widely scatered retailers.
- STORAGE
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By buying goods in bulk , a wholesaler relieves the producers the barden of carrying large stock . producers do not have to make arrangement for warehousing.
- PRICE STABILITY/ ECONOMIES OF SCALE
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Wholesaler stores goods during the stock season and do sell them during the period of peak demand by so doing, he prevents the violent fluctuations of prices.
- FINANCING
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A Wholesalers makes prompt and sometimes pay in advance to the producer. therefore producer have to invest lesser capital in the business.
B. SERVICES TO RETAILERS
- PUBLICITY AND ADVICEWholesalers advertise their goods regularly, such publicity help the retailers in increasing their sales . some wholesalers also guide retailers in store layout and selling techniques.
- CREDIT
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Wholesalers grant liberal credit facilities to retailers as a result, retailers can carry on a large volume of business ever with small capital.
- ECONOMIES OF SCALE
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Wholesalers operate in the large scale, therefore they can obtain heavy discounts and rebate from producers and freight costs. so retailers buy goods from wholesalers at the reasonable prices.
- PRICE STABILIZATION
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By regulating the supply of goods , wholesalers maintain stability in price which enable retailer to take a fair margin in profit. Wholesalers also help retailers to take advantages of favorable fluctuations in prices.
- PROTECTION FROM RISK
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Wholesalers relieve the retailers from several risk by keeping huge stock and selling goods on credit . retailers now can bear less risk of price fluctuation and spoilage goods.
- INFORMATION ABOUT NEW PRODUCT
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A Wholesaler keeps in constant touch with producer, therefore he has up-to –date information about new product and new varieties of a existing products. He passes on such information to retailers.
- REGULAR SUPPLIES
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Wholesaler stock variety of goods . by so doing he ensure that supplies to retailers are available at right time ,right place and at reasonable price .