Unit-4 WHOLESALE TRADE

UNIT-4

WHOLESALE TRADE

Wholesaler

            Wholesalers are traders who act as intermediaries between the producers and the retailers. They purchase goods bulkily for the producers to store at their own warehouse and sell to the retailers in smaller quantities

FUNCTIONS OF WHOLESALER

1. Bulk purchases and breaking

2. Warehousing

3. Keep price stability

4. Free delivery

5. Provide information to the parties

6. Provide credit facilities to the retailers

ADVANTAGES OF WHOLESALING

1.    Economies of scale

                   Wholesalers buy goods bulkily from the manufactures. It enables them to take the advantages of discounts and increase profits and sales.

2.    Specialization

                   Wholesalers can concentrate to a particular type of product which is demanded in a particular area. It ensures the continuous supply of goods without price variation.

3.  Price stabilization.

                   Shortages to the products always tend to increase the prices of such products. But wholesalers help to reduce the price of goods by providing goods to the retailers in time by keeping goods bulkily in their own warehouses.

4. Regular supply of goods.

                   Wholesaler helps to reduce the distance between the retailer and the manufacture. Otherwise it takes too much time to supply goods from the manufacture to the consumers.

TYPES OF WHOLESALERS

1. General Wholesalers- They are large scale wholesalers operate on national and regional bases. They purchase goods from manufactures and store at their own warehouses at different places.

2. Specialist Wholesalers- They are wholesalers who restrict their operation on a particular product and to a particular area.

3. Cash and carry Wholesalers- They are wholesalers who do not allow credit facilities to the buyer. They are similar to the large-scale retailers but do not provide delivery to the customers.

SERVICES OF WHOLESALERS

1. Services of wholesalers to the Manufactures.

            1. Place bulk order for the goods

            2. Providing market information (demand and supply)

            3. Reduces the risk warehousing.

            4. Clearing production lines by carrying goods from manufactures to the retailers.

            5. Reduces the difficulties in marketing such as delay in delivery, warehousing, distribution, etc.

2. Services of wholesalers to the Retailers

            1. Provide wide variety of goods in small quantities.

            2. Provide information about new products

            3. Provide free delivery of goods

            4. Provide credit facilities to the retailers.

            5. Introduce new products.

REASONS FOR THE ELIMINATION OF WHOLESALERS.

1. Growth of manufacturer’s own retail outlets

2. Growth of large scale retailers so they perform all the functions of wholesalers.

3. Large scale retailers buy goods bulkily and get discounts so this enables them to sell at lower prices.

4. Growth of home shopping or online business.

 

BUSINESS INTERMEDIARIES (MIDDLEMEN)

1. Brokers- They are middlemen who bargain to sell or buy goods. They help to bring buyers and sellers together. They take commission called brokerage.

2. Factors- They find buyers for the sellers and take the possession of goods from his principal. They sell goods in their own name and take all the responsibilities to sell the goods.

3. Commission agent- A commission agent buys and sells goods in return of a commission. He acts as a middleman in between the owners and the buyers.

4. Del-credere agent- Del-credere agent possesses the goods and guarantees to sell the goods. If the goods are not sold, it may bring loss for him. Here as he takes too risk so gets high commission.

5. Freight forwarding agent- Freight forwarding agents specialize in arranging transport facilities in international trade. They help in logistics management by clearing customs formalities, insurance, other documentation procedures on behalf of the principal.

Functions of middlemen

1. They bring buyers and sellers together.

2. They reduce the risk of suppliers.

3. They help in arranging transportation and warehousing.

4. They help in documentation for foreign trade.