Wholesaling of products

Wholesaling:-

Wholesaling includes all the activities in selling goods or services to those who buy for resale or business use. It excludes manufacturers and farmers because they are engaged primarily in production, and it excludes retailers. The major types of wholesalers are described in Table 16.5. Wholesalers (also called distributors) differ from retailers in a number of ways. First, wholesalers pay less attention to promotion, atmosphere, and location because they are dealing with business customers rather than final consumers. Second, wholesale transactions are usually larger than retail transactions, and wholesalers usually cover a larger trade area than retailers. Third, the government deals with wholesalers and retailers differently in terms of legal regulations and taxes. Why do manufacturers not sell directly to retailers or final consumers? Why are wholesalers used at all? In general, wholesalers are more efficient in performing one or more of the following functions:

• Selling and promoting. Wholesalers’ sales forces help manufacturers reach many small business customers at a relatively low cost. They have more contacts, and buyers often trust them more than they trust a distant manufacturer.

• Buying and assortment building. Wholesalers are able to select items and build the assortments their customers need, saving them considerable work.

• Bulk breaking. Wholesalers achieve savings for their customers by buying large carload lots and breaking the bulk into smaller units.

• Warehousing. Wholesalers hold inventories, thereby reducing inventory costs and risks to suppliers and customers.

• Transportation. Wholesalers can often provide quicker delivery to buyers because they are closer to the buyers.

• Financing. Wholesalers finance customers by granting credit, and finance suppliers by ordering early and paying bills on time.

• Risk bearing. Wholesalers absorb some risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.

• Market information. Wholesalers supply information to suppliers and customers regarding competitors’ activities, new products, price developments, and so on.


• Management services and counseling. Wholesalers often help retailers improve their operations by training sales clerks, helping with store layouts and displays, and setting up accounting and inventory-control systems. They may help industrial customers by offering training and technical services

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