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Chapter: 11th Commerce : Channels of Distribution

Characteristics and Function of Wholesalers

Wholesalers buy goods directly from producers or manufacturers,

The Characteristics of Wholesalers

The following are the characteristics of wholesalers;

1.        Wholesalers buy goods directly from producers or manufacturers,

2.        Wholesalers buy goods in large quantities and sell in relatively smaller quantities,

3.        Wholesalers sell different varieties of a particular variety of product,

4.        They employ a number of agents or workers for distribution of products

5.        They need large amount of capital to be invested in his business,

6.        They generally provide credit facility to retailers,

7.        They also provide financial assistance to the producers or manufacturers,

8.        In a city or town, they are normally located in one particular area of the market.


Function of Wholesalers

Following are the functions of wholesalers,

a.        Collection of Goods: Wholesaler collects the goods from manufacturers or producers in bulk.

b.        Storage of Goods: Wholesaler collects and stores them safely in warehouses, till they are sold out. Perishable goods like fruits, vegetables, etc. are stored in cold storage facility.

c.         Distribution: Wholesaler sells goods to different retailers. Thus he performs the function of distribution.

d.        Financing: Wholesalers provide financial support to producers and manufacturers by providing money in advance to them. He also sells goods to retailer on credit. Thus, at both ends wholesaler acts as a financier.

e.         Risk Taking: Wholesaler buys finished goods from the producer and keeps them in the warehouses till the time they are sold and assumes the risk arising from price, spoilage of goods, and changes in demand.

f.          Grading Packing and Packaging: Wholesaler classifies the goods into different categories. He grades the goods on the basis of quality, size and weight etc. He also undertakes packaging of goods and also performs the function of branding.

g.        Providing Information: Wholesalers provide valuable information to retailers and producers. The retailers  are informed about the quality and type of products available in the market for sale. The producers are informed about the changes in taste and fashions of consumers by wholesalers so that they may produce the goods on the basis of tastes and preferences of customers.

h.        Transportation: A wholesaler arranges for the transport of goods from producers to his warehouse and from the warehouse to retailer. Many wholesalers maintain their own trucks, carry goods in bulk and add place utility to the goods.


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11th Commerce : Channels of Distribution : Characteristics and Function of Wholesalers |

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