1. Convenience in buying:
The retailers can purchase different varieties of goods from one place and need not approach several scattered producers. Wholesalers deliver goods according to the demand of retailers even at a short notice. Retailers can obtain goods more quickly than they could by placing orders directly to manufacturers.
2. Credit facility:
Wholesalers provide financial assistance to retailers by selling goods on credit. They enable the retailers to carry on trade at a much larger scale than their means would permit them. They need not invest large working capital.
3. Regular supplies:
Wholesalers keep large stock of goods. They provide a regular supply of goods to the retailers. Retailers can purchase as much as they like from time to time and need not maintain a large stock of goods.
Wholesalers advertise goods on a large scale to create demand. This enables the retailers to increase their sale without spending money on advertising.
5. Price stability:
Wholesalers reduce price fluctuations by adjusting supply and demand. They save the retailers from the loss which they may suffer due to these fluctuations.
6. Introduction of new products:
Wholesalers bring new products and their uses to the notice of retailers. Retailers get the benefit of specialisation and guidance from wholesalers. They also receive discounts on bulk purchases from wholesalers.
7. Assumption of risk:
Wholesalers save retails from the risk of loss due to damage, changes in prices, etc. as the retailers need not maintain large stocks.
8. Economy in transport:
A wholesaler often delivers goods at the door steps of retailers. This saves time and cost of transportation.
9. Advice to retailers:
Wholesalers provide advice to retailers regarding quality, prices and sale of goods and wholesalers provide home delivery services to retailers.
Services to Customers
1. Ready supply:
Wholesalers keep ready stocks with them so that consumers can buy goods from retailers without waiting for them.
Wholesalers make goods available according to the needs and preferences of consumers. Consumers get a wide choice.
3. Low price:
Wholesalers make large scale production possible thereby keeping the price level low. Prices are stabilised by adjusting supply and demand.
Wholesalers provide information about types, quality and uses of new products from time to time.
5. Market Research:
Some wholesalers conduct marketing research to improve the quality of goods and to help producers know the changes in tastes and preferences of consumers. Consumers get the benefit of such research.
Types of Wholesalers
Wholesalers may be classified as follows:
1. Manufacturer wholesaler:
This type of wholesaler undertakes manufacturing of goods in addition to wholesale business. He sells the goods manufactured by him on wholesale business. He may also sell to retailers the goods manufactured by other producers.
2. Retailer wholesaler:
Such a wholesaler carried on both wholesale and retail trade. He purchases goods in bulk from manufacturers and sells them directly to consumers through his own retail outlets. Super Bazar is an example of this type of wholesaler.
3. Merchant wholesaler:
This type of wholesaler neither manufactures goods nor sells directly to consumers. A true wholesaler is himself neither a manufacturer nor a retailer but acts as a link between the two.
He is the ‘wholesaler proper’ or ‘pure wholesaler’. He buys goods in bulk from manufacturers and sells them to retailers in smaller lots. On the basis of degree of specialisation merchant wholesalers may be classified into three categories as under:
(a) General merchandise Wholesaler:
This type of wholesaler deals in a wide range of goods. He keeps several product lines e.g., food products, cloth, household appliances, etc. Such a wholesaler is a boon to small retailers who can easily buy all their requirements at one place.
(b) Single line wholesaler:
This type of wholesaler deals in one line of products only. For example, the single line merchandise may be stationery or groceries or food products. He keeps different varieties and quantities of the product line to meet the requirements of retailers.
(c) Specialised wholesaler:
This type of wholesaler specialises in a single product. For example, instead of dealing in all items of groceries, he may keep only tea. Similarly, a specialised wholesaler may deal in sarees only rather than in all types of clothing.
Survival or Elimination of Wholesalers
Wholesalers render very useful services in the course of trade. However, some people question the need for wholesalers. They believe that a large number of middlemen between the manufacturer and consumers cause delay in the flow of goods and increase costs.
They think that if the number of middlemen is reduced goods can be delivered to the consumer more quickly and at a lower cost. In recent years there has been a trend towards direct marketing of goods.
But another section of society considers that middlemen are indispensable. Let us discuss arguments both in favour of and against the elimination of wholesalers. Arguments for Elimination
1. Higher prices:
The profit margin of wholesalers increases the cost of goods to the ultimate consumer. Elimination of wholesalers will make the goods available to consumers at lower prices.
In some cases, wholesaler is the sole distributor of goods in an area and retailers have to depend on him for their supplies. He takes undue advantage of his monopoly position and charges exorbitant prices.
2. Artificial shortage:
Wholesalers restrict the free flow of goods from manufacturers to consumers. They create artificial scarcity by hoarding goods. Some of them even indulge in adulteration of goods to maximise their profits.
Wholesalers do not allow the development of direct personal relations between producers and customers. Wholesalers are not required in case of products which are sold directly manufacturers e.g., Bata, Raymonds.
4. No risk-bearing:
Wholesalers do not bear risk arising from strikes, lockouts, etc. They are parasites thriving at the cost of consumers.
5. Transfer agents:
Most of the wholesalers are mere transfer agents rendering superfluous services. They make little attempt to improve storage and other marketing techniques.
6. Large retailers:
Large and well-established retailers can afford to buy their supplies in bulk directly from the producers. There is no need for wholesalers in such cases.
Many wholesalers engage in reckless speculation to make quick money at the cost of consumers.