CONTENT
Wholesale Trade
The Channels of Distribution
 
Wholesale Trade
Meaning of Wholesaler and Wholesale Trade
A wholesaler is a trader who buys goods in bulk or in large quantities from the producer/manufacturer and sells in small quantities to the retailer.
Wholesale trade therefore is a type of trade in which goods are bought in bulk or in large quantities from the producer or manufacturer with the aim of selling them in small quantities to a retailer (one who sells goods in small bits to the consumer).
Features of Wholesale Trade
(i) Bulk breaking
(ii) Buys goods in large quantity and sells in small quantity to retailer.
(iii) They are the middlemen between the producer and retailers.
Functions of Wholesalers to the Manufacturer/Producer
(i) Breaking of bulk: They buy in bulk and sell in small quantities to the retailers.
(ii) Warehousing function: The wholesalers are able to purchase very large quantities from the producers, which they store in the warehouse until they are required by the retailers.
(iii) Transport and delivery services: They receive large quantities from the producers make them available to countless retailers through their own network of distribution centres.
(iv) Risk bearing: The wholesaler can anticipate business risks in distribution and take appropriate measures to reduce their impact by taking the necessary insurance cover.
(v) Branding, packaging and labeling: The wholesalers may prepare commodity for sale by packaging , branding and grading.
(vi) Advertising function: They do most of the work of finding ready-made market for the products. This is done through advertising and promotion.
(vii) Price stability.
(viii) Financing the producers.
Functions of Wholesalers to Retailers
Wholesalers sometimes pre-packed, brand and grade goods for retailers
They stimulate demand for goods through sales promotion.
They often offer credits facilities to the retailers.
They provide retailers with technical information and advice on new products.
For the convenience of retailers, wholesalers carry inventory of assorted goods procured from different manufacturer.
Advertising of goods
Price stability
Transportation services
Links the retailer and producer.
Arguments for the Survival of Middlemen
The middlemen should not be eliminated because the functions they perform to both the producers and ultimately to customers cannot be performed by any of them i.e. the manufacturer or customers. The reasons why they should not be eliminated include;
Bulk breaking
Credit facilities to the consumer
Warehousing
Financing
Giving advice to both manufacturer and consumer
Conducts market research
Branding and packaging
Provision of transport.
Risk bearing