WHOLESALE TRADE

HOME TRADE: THE WHOLESALE TRADE

 Wholesale Trade deals with the buying goods in larger quantities (bulk) from various manufactures and then breaking it down into small quantities which then sold to the retailers. The wholesaler acts as an intermediate link in the chain of production



Functions of the wholesaler



1. Searching out sources of supply

 The wholesaler buys goods in bulk from the producers locally or overseas in the hope that he will be able to resell them at a profit

 A wholesaler has specialist buyers who are in very close contact with the market and who know the various sources of supply



2. Risk bearing

 They buys good in advance of demand based on up-to date and reliable information on the likely tastes and preferences of consumers.

 He bears the risk of loss in cases of the products are damaged, spoilt or stolen and have to sell off the goods at a loss in the case of change in taste



3. Warehousing

 The wholesaler stores the goods which are purchased in advance before they are distributed to the retailers



4. Breaking bulk

 The wholesaler breaks bulk or divide the goods bought into small quantities and sells them in even smaller quantities to various retailers



5. Delivery

 The wholesalers provides transport for goods from the suppliers to suitable deports to the retailers’ shop



6. Finance

 The wholesaler finances the retailer by allowing him extended credit

 He finances the producer indirectly by paying him on time



7. Information

 The wholesaler acts as a link between the retailers and producers by informing producers of the retailers’ reactions about their goods and acquainting retailers with new products and other development in the market



Services of wholesalers to the Manufacturer



1. Finds new markets for the manufactures

 The wholesalers will find new markets for the manufactures since they will sell the goods to various retailers which can come from different areas of the country



2. Helps warehouse the goods

 The wholesaler stores the goods which are purchased in advance therefore the manufactures relieved from paying the expenses of storage like rent, insurances, wages and so on

 Manufacturer of goods in seasonal demand like winter clothing and greeting card is able to continue production throughout the year as the wholesaler are willing to absorb the products as they are being produce



3. Finances the producer by paying cash

 By paying the manufacturer on time, the wholesaler reduces the amount of working capital required by the manufacturer and allows the continuation of the production run smoothly



4. Helps to distribute the goods to the retailers in just the quantities needed

 The wholesaler breaks bulk or divide the goods bought into small quantities from the manufactures and sells them in even smaller quantities to various retailers



5. Passes information from retailers to the manufacturer

 The wholesaler acts as a link between the retailers and producers by informing producers of the retailers’ reactions about their goods



Services of the wholesaler to the retailer



1. Breaking bulk and sell in small quantities to the retailer

 A wholesaler willing to sell in small quantities to a retailer who only place a small orders and unable to get their stock directly from the manufacturer who only sell in bulk


2. Cash flow problems of retailers are reduced

 A wholesaler provides credit to a retailer therefore the retailers have time to sell the goods before they have to pay for them



3. Retailers are relived of preparing the goods for sale

 A wholesaler simplifies a retailer’s work since the goods are already graded and pre-packed into convenient quantities and sizes



4. Retailers are relieved of the risk and expenses of storage

 A retailer always assured of delivery of fresh stocks from the wholesaler’s warehouse if he runs short.

 This reduces the amount of stock he needs to hold at a time, hence saving on costs of storage, insurance and risk



5. Retailers are given a wide choice of related products, both local and foreign

 Wholesaler offers a variety of goods made by various manufacturers, both local and abroad.

 The retailer is also kept up to date on the latest products available