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Chapter: 11th Commerce : Channels of Distribution

Services of a Wholesaler

A wholesaler provides valuable services to manufacturers, producers, retailers and customers.

Services of a Wholesaler

A wholesaler provides valuable  services  to manufacturers, producers, retailers and customers.

 

Services to Producers or Manufacturers

1.        Economies in Large Scale: A wholesaler buys goods in bulk and, thereby, enables the producers to produce goods on a large scale. Large scale production helps to reduce the cost of production per unit.

2.        Assistance in Distribution: Wholesalers collect orders from a large number of retailers scattered over a wide area and buy goods in bulk from producers. He enables producers to reach customers scattered over different parts of the country by distributing goods through retailers located in different areas. Therefore producer can concentrate only on production.

3.        Warehousing Facility: A wholesaler holds large stock of goods in his private warehouse or in a rented warehouse. In this way he relieves the manufacturer from the function of warehousing.

4.        Forecasting of Demand: A wholesaler collects information from retailers about the nature and extent of demand and passes it onto the producers and enables them to produce goods according to the needs, tastes and fashions prevailing in the market.

5.        Publicity of Goods: Often wholesalers launch advertising campaign to boost the demand for the goods. Producers get  the  benefit  of  such   publicity and thus enabled to spend less on advertising.

6.        Financial Assistance: A wholesaler often makes advance payments to producers. He buys the goods as soon as they are produced. Producers need not lock up their capital in maintaining huge stock of goods.

7.        Risk-bearer: A wholesaler provides ready market to producers by placing advance orders and relieves the manufacturer from the risk of loss due to fluctuation in demand and storage of goods. He also reduces the risk by matching seasonal demand.

8.        Link: A wholesaler serves as a useful intermediary between the producers and retailers.

 

Services to Retailers

1.        Financial Assistance: Wholesalers provide financial assistance to retailers by selling goods on credit. This is done by allowing credit to retailers purchasing goods from them and makes payment to them after receiving money from their customers. This helps retailers to manage their business with small amount of working capital.

2.        Meeting the Requirements: Due to limited capital and lack of space in his facility a retailer cannothold large variety of products. The wholesaler removes this difficulty by selling goods as and when the retailer requires.

3.        Introduction of New Products: Wholesalers bring new products and their uses to the notice of retailers. Thus retailers get knowledge about innovated products and innovated features.

4.        Price Stability: Wholesalers reduce price fluctuations by adjusting supply and demand and save the retailers from loss arising from price fluctuations.

5.        Economy in Transport: A wholesaler often delivers goods at the door steps of retailers and save their time and cost of transport.

6.        Regular Supply: Wholesalers keep large stock of varieties of goods and provide  a regular supply of goods as per the retailer’s need. Retailers can purchase as much as they like, from time to time and need not maintain a large stock of goods.


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11th Commerce : Channels of Distribution : Services of a Wholesaler |


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