- Role of Whole Sale Trader:
From this figure above, you can see the demands of the retailers are completely contrary to the conditions of manufacturers. Therefore, there has to be a middle man who can fill this gap. This role is played by wholesalers.
- Decline in Wholesale trade:
- The growth of manufacturers who like to sell their product directly to consumer – they can sell their products at lower prices and absorb the profit of retailer and wholesaler
- Increase in number of large scale retailers who can afford to buy directly from manufacturers
- Functions of Wholesaler:
- Warehousing:
A warehouse is a place where large quantities of goods can be stored. Wholesalers provide this facility to both manufacturers and retailers.
- Marketing:
Some manufacturers focus on manufacturing only – they give goods to wholesaler on cheaper rates and ask them to bear the expenses of advertising these goods. However, some manufacturers advertise for their goods themselves.
- Reservoir:
Wholesalers keep all types of goods so that retailers do not have to go to different wholesalers to get different products. It saves the time and effort of retailers.
- Price Stability:
Wholesalers ensure the reliable supply of those products which are produced in one season only
- Delivery:
Wholesalers usually deliver directly to the retailer’s doorstep so retailers just need to place orders. This saves them the transportation cost.
- Risk Bearing:
Some products depend on fashion and taste so wholesalers bear a huge risk by stocking such products in bulk.
- New Trends in Wholesaling:
Cash and Carry:
- Large wholesale stores
- Do not offer credit to retailers
- Are not responsible for delivering goods to retailers
- Buy in bulk
- Sometimes they sell with the consumers directly too
- Intermediaries:
They are the people involved in the distribution of goods from the producer to final consumer
Mercantile agents work on a commission basis. They can be sub divided into 2 types, factors and brokers.
| Factors | Brokers |
| Concerned with the sale of goods delivered to him by the principal | Concerned with the sale or purchase of goods or services for the principal |
| Has possession of the goods of principal | Does not have possession of the goods of principal |
| Remunerated with commission | Remunerated with brokerage |
| Can make a profit from sales | Cannot make a profit from sales |
| Can sell the goods in his own name | Cannot sell the goods in his own name |
Merchants are general purpose wholesalers. They buy from the manufacturer in bulk at low prices and sell to the retailer in small quantities thus making a profit.
A “Forwarding Agent” is appointed by the Principal for the collection and shipment of his goods for export or arrangements to dispatch imports.