A wholesaler provides valuable services to manufacturers/producers, retailers and customers. Services to Producers or Manufacturers
1. Economies of large scale:
A wholesaler buys goods in bulk and, therefore, 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:
A wholesaler collects orders from a large number of widely scattered retailers and buys goods in bulk from producers. He enables producers to reach customers scattered in different parts of the country by distributing goods through retailers located in different areas.
The producer can concentrate on productions of goods as he is relieved of the problems of distributing the goods.
3. Warehousing facility:
A wholesaler holds large stocks 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 on to the producers. He 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 goods. Producers get the benefit of such publicity and they have to spend less on advertising.
6. Financial assistance:
A wholesaler often makes advance payments to producers. He buys goods as soon as they are produced. Producers need not block their capital in maintaining huge stocks of goods.
A wholesaler provides ready market to producers by placing advance orders. He relieves them from the risks of loss due to fluctuations in demand and storage of goods. He also reduces risk by matching seasonal demand and supply.
8. Regular production:
A wholesaler enables the producers to maintain an even pace of production by placing advance orders. He also provides them bulk supply of raw materials from different sources.
A wholesaler serves as a useful intermediary between the producers and retailers.