September 12, 2018 251
September 12, 2018 251
Wholesalers are merchant middlemen that take title to the goods they handle.
They operate between producers or manufacturers and retailers, other wholesalers, merchants and or industrial institutions and commercial users. Wholesalers do not sell in significant amounts to the ultimate consumers.
They, however, sell to those who will resell the goods or use them to produce other goods.
The Functions of Wholesalers
Wholesalers are pure marketing institutions that perform all marketing functions of:
Wholesalers have specially trained and expert buyers that specialize in the products they handle. These buyers have skills in buying the products they specialize in. They know all the sources of supply for such products. They know the actual time to buy the items and have expert knowledge about the market conditions for these product items.
Wholesalers employ travelers and salesmen to scout around for customers. They have prepared catalogs and price lists which are made available to their customers. They advertise in journals and trade magazines. They also exhibit goods from various manufacturers in their warehouses. This provides opportunities for retailers to inspect and evaluate the goods before they buy them.
Wholesalers contribute to completing the production process of some items. For example, wholesalers store spirits and liquor in their specialized warehouses for them to mature. They also buy some items in bulk like flour and grains and re-bag them into smaller sizes which they sell to retailers.
Wholesalers have huge warehouses where they stock many manufacturers’ products. In fact, the warehouses are the main assets. They buy in large bulks to stock, thus providing the manufacturers with storage facilities. This is because the manufacturers will not have to stock the items produced themselves.
Wholesalers buy in large bulks and pay in time to provide the manufacturers with funds to continue their productions. Wholesalers also grant credit to retailers. This affords the retailers the opportunity of selling their items before having to pay for them.
6. Information Processing
Wholesalers operate between manufacturers and retailers. They obtain useful information about the market from the retailers and also from their own travelers and salesmen. They feed these information back to the manufacturers.
The retailers also use them as their sources of information concerning the operations of the various manufacturers and their products. They maintain samples of the different manufacturers’ products in their warehouses for retailers to inspect. They prepare catalogs, some containing pictures of samples, and price lists which they distribute to their customers.
Wholesalers usually maintain large fleets of trucks. They pick up their own goods from the manufacturers and convey them to their warehouses. They also deliver goods to retailers in their own trucks.
8. Risk Bearing
Wholesalers are merchant middlemen. They take little to the goods they handle because they buy and own them. They, therefore, bear all the risks of losses or profits, price changes, spoilage and pilferage, fashion and taste changes, and the other unforeseen risks. They are responsible for insurance against these risks.
Relationship Between Wholesalers and Manufacturers
Manufacturers have some special advantages when they use wholesalers to distribute their goods.
Relationship Between Wholesalers and Retailers
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