What do wholesalers provide to retailers

He ensures that the goods are available to the retailers at all times. Retailers can replenish their stocks from time to time by purchasing goods from the wholesaler. Wholesalers help to stabilize prices by adjusting supply according to demand. Many wholesalers maintain their own warehouses for storing goods. Wholesalers provide facilities for the transportation of goods from the producers to his own godown.

They also send goods to retailers in far-flung areas. They save costs through bulk transportation of goods. Some wholesalers maintain their own vehicles for this purpose. Many wholesalers sort out goods according to size, shape, quality, etc.

They break the goods into small lots, repack them and put their own brand names. In this way, they perform the functions of packing, branding and grading. By grading and standardization, they ensure supply of uniform quality to retailers.

Some wholesalers finance the manufacturer by giving them advance money with order or by purchasing large quantity of goods on cash basis and the retailers by granting credit to them. Thus, they help the producers as well as the retailers to a great extent. Wholesalers serve as a shock absorber. They have to bear the risk entailed in the process of distribution of goods. It may arise due to change in demand or damage to goods while in storage.

They protect the producers against this risk and also have to bear other losses including the loss through debts etc. Wholesalers try to maintain and stabilize prices by regulating supply of goods in accordance with the demand. They foresee market conditions, the demand for the goods, the tastes of the people and keep arrangements ready to meet the demand when it comes up. Function 9.

Communication of Market Information:. Wholesalers foresee market conditions. They collect information from retailers about changes in the tastes, fashions and buying habits of consumers and pass this information to manufacturers. Some wholesalers also conduct market surveys.

On the basis of their vast knowledge about the goods produced by different manufacturers, wholesalers advise retailers about the goods that will satisfy the needs of consumers in the best way. Wholesalers also provide packing facility to the retailers. They purchase goods in a bulk and split them into smaller lots and then repack them for the sale to the retailers.

Wholesalers usually deal with a specific variety of products and perform various functions, which are as follows:. Collection and Storage of Products — It refers to the bulk purchasing of products from manufacturers and keeping the products in warehouses. Distribution — It sells the products to various retailers located at different places. Risk Taking — It refers to the risk covered by the wholesalers during the possession of products. Selling and Promoting — It refers to an activity conducted by the wholesalers to promote products and persuading customers to buy the products.

Management Services — This helps retailers to improve store layouts and inventory management systems. Bulk Breaking — It means decreasing the lot size of the products to sell products as per the requirement of retailers. Market Information — It facilitates manufacturers with the information about customers and market research.

Assembling and Buying — Assembling means bringing together stocks of different manufacturer who produce same line of goods. Buying means selecting the manufacturers and placing order on them. Buying also means making special purchase in case of seasonal products. Warehousing — Warehousing provides the storage function. There is always a gap between the production and consumption of goods. For this period goods have to be stored and preserved. Wholesaler stores the goods in warehouse and thus relieves the producer and retailer from problem of storage.

Transporting — Wholesaler undertake to transport the goods from producer to their warehouses and then to the retailers. Financing — Wholesaler provides credit facilities to the retailers and makes advance payment to the producer for their working capital requirement. Risk Bearing — Wholesaler bears various risks associated with the business. Risk related to changes in prices, damage to goods, theft, fire, non-payment, etc. Providing Market Information — Wholesaler is the link between the producer and retailer.

He provides relevant information to the retailers related to their trade interest. Similarly, they provide relevant market information to the producer which they get from the retailer. Grading, Packing and Packaging — Wholesaler buy in bulk quantities therefore later they sort out the goods on the basis of size, quality, etc.

Smaller lots are prepared and properly packed for the retailers. Dispersing and Selling — The goods purchased from the producers are stored and then dispersed and sold to the retailers.

For this they contact the retailers and get the order. Assembling — Wholesaler collects varieties of a product from different manufacturers and keeps them in stock for sale to the retailers.

Some wholesalers collect product only from a single producer. Dispersion — Products assembled and kept in stock in the warehouses are distributed to the retailers, thereby dispersing the goods to various locations.

Warehousing — Goods bought from manufacturers or producers are safely stored in warehouses pending their sale to the retailers. Transportation — Wholesalers have to move the goods from the place of production to their warehouses and from there to the place of retailers.

They arrange and maintain their own vans for the movement of goods. Financing — Wholesalers sometimes finance the manufacturers and retailers.

They purchase goods from the manufacturers in cash or deposit security to assure the purchase of goods. They also supply goods, to the retailers on credit. Grading and Packaging — Wholesaler performs the task of sorting out different grades of products purchased either from one producer or from different producers according to quality and other considerations and packing the goods into smaller lots for retailers.

Pricing — Retailer determines the price to be charged from customers on the basis of the price fixed by the wholesaler.

Wholesalers have specific information about the product and can also suggest the price to be fixed by the producer. Risk-Assuming — Wholesaler undertakes the risk of manufacturers and retailers. Having purchased the goods from the manufacturers in large quantities, he assumes the risks arising out of changes in demand and spoilage or destruction of goods in his warehouse.

He takes the credit-risk by selling the goods to the retailers on credit. Wholesalers offer five key services to manufacturers:. Wholesalers purchase products from the manufacturer in bulk and maintain these products at their own warehouses. Thus, manufacturers do not need to use their own space to store the products. In addition, manufacturers can maintain a smaller inventory and therefore do not have to invest as much funds in inventory.

To illustrate how manufacturers can benefit from this warehousing, consider Jandy Industries, which produces equipment for swimming pools. Jandy sells its products in bulk to wholesalers that are willing to maintain an inventory of parts. Jandy focuses on maintaining its own inventory of uncommon parts that are not carried by wholesalers. Wholesalers use their sales expertise when selling products to retailers.

Once a wholesaler persuades retailers to purchase a product, it will periodically contact the retailers to determine whether they need to purchase more of that product. Wholesalers are responsible for delivering products to various retailers.

Therefore, manufacturers do not need to be concerned with numerous deliveries. Instead, they can deliver in bulk to wholesalers. Wholesalers are channel members that buy finished products from manufacturers and sell them to retailers. Retailers in turn sell the products to consumers. Wholesalers also sell products to institutions, such as manufacturers, schools, and hospitals, for use in performing their own missions.

A manufacturer, for instance, might buy computer paper from Nationwide Papers, a wholesaler. Sometimes wholesalers sell products to manufacturers for use in the manufacturing process. A builder of custom boats, for instance, might buy batteries from a battery wholesaler and switches from an electrical wholesaler. Some wholesalers even sell to other wholesalers, creating yet another stage in the distribution channel. The two main types of wholesalers are merchant wholesalers and agents and brokers.

Merchant wholesalers take title to the product ownership rights ; agents and brokers simply facilitate the sale of a product from producer to end user. Merchant wholesalers make up 80 percent of all wholesaling establishments and conduct slightly less than 60 percent of all wholesale sales.

A merchant wholesaler is an institution that buys goods from manufacturers and resells them to businesses, government agencies, other wholesalers, or retailers. All merchant wholesalers take title to the goods they sell.

Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Wholesaling is the act of buying goods in bulk from a manufacturer at a discounted price and selling to a retailer for a higher price, for them to repackage and in turn resell in smaller quantities at an even higher price to consumers.

Due to the large quantities purchased from the manufacturer at a discounted price, the wholesaler can also pass on this discount to retailers. The retailer sells at a price that reflects the overall cost of doing business. Most wholesalers do not manufacture the goods they sell but rather buy them from the source and concentrate on the business of sales and delivery to retailers.

They are known as the middlemen in the supply chain. It is more cost-effective for a wholesaler to buy in bulk from a manufacturer and receive a discount than it would be to buy items individually.

The wholesaler will then sell to a retailer at a higher price than it paid for the goods but are still able to provide a similar discount to the retailer as they received when the retailer buys in bulk. For example, Walmart will purchase its products from wholesalers in bulk; they may buy thousands of bottles of hand moisturizer. It will receive a discount on buying such a large volume than if it were to just buy a few. Walmart then stocks its shelves with the moisturizers and continuously restocks from its large inventory when the shelves are empty.

A wholesaler may specialize in a single product or product category or may offer a variety of goods. It can be anything from milk to electricity. Some wholesalers also broker deals between other wholesalers and retail businesses that require a variety of goods, or components of goods, that can be more efficiently obtained from a single source. A wholesaler should not be confused with an "official distributor" for a brand's product line.

The wholesaler does not generally offer product support, may not be connected directly to the company from which it purchases products, and may even have limited familiarity with the products.