A wholesaler is necessary because he performs several marketing functions which are given below:
A wholesaler buys goods in bulk from different manufacturers and keeps them at one place. He collects goods from several places much in advance of demand. He may also import goods from foreign countries.
2. Warehousing or storage:
There is usually a large time gap between production and consumption of goods. Goods must, therefore, be stored for a considerable time.
A wholesaler stores goods in his warehouse and makes them available to retailers as and when demanded. He stabilizes prices of the goods by adjusting the supply with the demand. He creates time utility.
A wholesaler distributes the assembled goods among a large number of retailers scattered at different places. He sells goods in small quantities according to the choice of retailers. This is known as 'breaking of bulk'.
A wholesaler arranges for the transport of goods from producers to his warehouse and from the warehouse to retailers. He carries goods in bulk thereby saving costs of transport.
Many wholesalers maintain their own trucks and tempos to carry goods far and wide quickly. Thus, a wholesaler adds place utility to the goods.
A wholesaler often provides advance money with orders to manufacturers. He purchases goods in bulk on cash basis from them. In addition, he often sells goods on credit basis to retailers. In this way, he provides finance to both producers and retailers.
6. Risk -bearing:
A wholesaler assumes the risk of damage to goods in transit and in storage. He also bears the risks arising from changes in demand and bad debts. He serves as the shock absorber in the distribution of goods.
7. Grading and Packing:
Many wholesalers classify the assembled goods into different grades, pack them into small lots and put their own trademarks or brand names. In this way, they perform the functions of grading, packing and branding.
A wholesaler anticipates demand and market conditions. He helps to determine the resale price of goods.