The
sale and distribution of goods to users other than end consumers. Wholesaling
involves selling merchandise to retailers, wholesalers and merchants, or to
industrial, commercial and institutional users. A wholesaler can act as a
middleman, brokering deals between these businesses. Wholesaling often occurs
when large quantities of merchandise are reassembled, sorted, then repackage,
and distribute in smaller lots.
Wholesaling includes all activities involved in selling
goods & services to those buying for resale or business use.
Wholesaling is one step on the
supply chain, which includes various companies like suppliers, manufacturers
and retailers. Retailers and other users purchase goods from wholesalers, and
then sell the products at a higher price to cover costs and generate profits..
Type of
wholesaler:
1. Merchant wholesalers
2. Agents
3. Brokers
1) Merchant
wholesalers are the largest single group of wholesalers, accounting for roughly
50 percent of all wholesaling . Merchant wholesalers include two broad types
full service wholesalers and limited service wholesalers .
2) Broker and
agents differ from merchant wholesalers in two ways: They do not take title to
goods and they perform few function like merchant wholesalers, Like merchant
wholesalers, they generally specialize by product line or customer type .A
broker brings buyer and sellers together and assists in negotiation .Agents
represent buyers or sellers on more permanent basis
Function of Wholesaler:
Function of
Wholesaler: A wholesaler is necessary because he performs several
marketing functions which are given below:
1. Assembling:
A wholesaler buys goods in bulk from different manufacturers and keeps them at
one place. He collects good 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 wholesalers stores goods in his warehouse and makes them available to
retailers & when demanded. He stabilizes prices of the goods by adjusting
the supply with the demand. He creates time utility.
3. Dispersion:
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.
4. Transportation:
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 cost of transport. Many wholesalers maintain their own trucks &
tempos to carry goods far and wide quickly.
5. Financing:
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 risk arising from changes in demand and bad debts. He serves as
the shock absorber in the distribution of goods.
7. Grading &
Packing: Many wholesalers classify the
assembled goods into different grades, pack them into small lots and put their
own trademarks & brand names. In this way, they perform grading, packing
and branding.
8. Pricing: A wholesaler anticipates demand and market
conditions. He helps to determine the resale price of goods.