WHOLESALE

TRADE

- REETIKA
ANAND
XI COMMERCE
MEANING AND DEFINITION OF WHOLESALER -

• “A wholesaler is a business unit which buys and resells to retailers…

industrial institutions and commercial users but does not sell in
signifi cant amount to ultimate consumers.”

- American Marketing Association

• “All merchants, agents and assemblers who intervene between

producers on the one hand and retailers and users on the other hand
are wholesaler traders.”

- Census bureau of U.S.A

CHARACTERISTICS OF A WHOLESALER –

• A wholesaler buys goods in bulk directly from manufacturers.

• He sells goods in small lots to the retailers and industrial

users.

• He generally specializes in one line of goods.

• He does not display his goods and provides samples only to

intending buyers.

• A wholesaler serves as a middleman between producers and

retailers
NECESSITY OR FUNCTIONS OF A WHOLESALER –
• BUYING AND ASSEMBLING – A wholesaler buys goods in bulk from different
manufacturers and keeps them at one place.

• WAREHOUSING OR STORAGE – There is usually a large time gap between production

and consumption of goods. So goods must be stored for a considerable time.

• PRICING – A wholesaler anticipates demand and market conditions. He helps to

determine the resale price of goods.

• RISK BEARING – A wholesaler assumes the risk of demand to goods in transit and in
storage. He also bears the risks arising from changes in demand and bad debts.

• FINANCING – A wholesaler often provides advance money with orders to

manufacturers. He purchases goods in bulk on cash basis from them.
 SERVICES OF
WHOLESALERS

Services to Services to
manufacturers
Services to retailers
consumers
1. Economics of
scale
2. Demand 1. Convenience in
forecasting buying 1. Ready supply
3. Assistance in 2. Credit facility 2. Wide choice
distribution 3. Regular supplies 3. Low prices
4. Warehousing 4. Publicity 4. Knowledge and
facility 5. Stability in prices education
5. Publicity 6. Introduction of 5. Market research
6. Financial new products
assistance 7. Assumption of risk
7. Risk bearing 8. Economy in
8. Regular transport
production 9. Advice to retailers
9. link
SERVICES OF A WHOLESALER-
• S E R V I C E S T O P R O D U C E R S O R M A N U FA C T U R E R S –

• ECONOMICS OF LARGE SACLE – A wholesales buys goods in bulk and , therefore, enables the produce
goods on a large scale. Large scale production help to reduce the cost of production per unit.

• A S S I S TA N C E I N D I S T R I B U T I O N – A w h o l e s a l e r c o l l e c t s o r d e r f r o m a l a r g e n u m b e r o f w i d e l y s c a t t e r e d
retailers and buys goods in bulk from producers. He enables producers to reach customers scattered
i n d i ff e r e n t p a r t s o f t h e c o u n t r y b y d i s t r i b u t i n g g o o d s t h r o u g h r e t a i l e r s l o c a t e d i n d i ff e r e n t a r e a s .

• W A R E H O U S I N G FA C I L I T Y – A w h o l e s a l e r h o l d s l a r g e s t o c k s o f g o o d s i n h i s p r i v a t e w a r e h o u s i n g o r in
rented warehouse. In this way he relieves the manufacturer from the function of warehousing.

• PUBLICITY OF GOODS – Often wholesaler launches advertising campaign to boost the demand for
g o o d s . P r o d u c e r s g e t t h e b e n e fi t o f s u c h p u b l i c i t y a n d t h e y h a v e t o s p e n d l e s s o n a d v e r t i s i n g .

• LINK – A wholesaler servers as a useful intermediary between the producers and retailers.

•
SERVICES OF A WHOLESALER-
• SERVICES TO RETAILERS –

1. PUBLICITY – Wholesalers advertise goods on a large scale to create demand . This

enables the retailers to increase their sale without spending money on advertising.

2. ECONOMY IN TRANSPORT - A wholesalers often delivers goods at the door steps of

retailers.

3. ASSUMPTION OF RISK – Wholesalers save retails from the risk of loss due to
damage, changes in prices, etc. as the retailers need not maintain large stocks.

4. PRICE STABILITY – Wholesalers reduce price fluctuations by adjusting supply and

demand .

5. INTRODUCTION OF NEW PRODUCTS – Wholesalers bring new products and their

uses to the notice of retailers .
SERVICES OF A WHOLESALER-
• READY SUPPLY – Wholesalers keep ready stocks with them so that
consumers can buy goods from retailers without waiting for Them.

• MATCHING – Wholesalers make goods available according to the needs and

preferences of consumers. Consumers get a wide choice.

• LOW PRICES – Wholesalers make large scale production possible thereby

keeping the price level low. Prices are stabilized by adjusting supply and
demand.
 TYPES OF WHOLESALERS

Types of wholesalers

Manufacturer Pure Retailer

Wholesaler Wholesaler Wholesaler

Specialize
General
Single line d
Wholesal
Wholesale Wholesal
er
e
TYPES OF WHOLESALE -
• MANUFACTURING WHOLESALER – This type of wholesaler undertakes
manufactured of goods addition to wholesale business. He sells the goods
manufactured by him on the wholesale business. He may also sell to retailers
the goods manufactured by other producers.

• RETAILER WHOLESALER – Such a wholesale carried on both wholesale and

retail trade. He purchases goods in bulk from manufacturers and sells them
directly to consumers through his own retail outlets.

• MERCHANT WHOLESALER – This types of wholesaler neither manufacturers

goods nor sells directly to consumers. A true wholesaler is himself neither a
manufacturer nor a retailer but acts link between the two .
TYPES OF PURE WHOLESALER-

• GENERAL MERCHANDISE WHOLESALER – This type of wholesaler deals

in a wide range of goods. He keeps several product lines e.g., food
products, cloth , household etc.

• SINGLE LINE WHOLESALE – This type of wholesaler deals in one line

of products only e.g., the single line merchandise may be stationery
or groceries or food products.

• SPECIALIZED WHOLESALER – This type of wholesaler specializes in a

single produce. For example, instead of dealing in all items of
groceries, he may keep only tea.
ORGANIZATION OF WHOLESALE TRADE

• A wholesale has to maintain large stocks of goods. He

requires big and update warehouses. Moreover, he often
has to buy goods in cash sell them at credit to retailers

• He also has to maintain motor vans to provide home

delivery to retailers.

• He has also to employ travelling salesman who visit various

retailers and book order
 BOARD OF DIRECTORS

Managing directors

Purchase Storage Sales Administration

department department department department

i. Receiving i. Cash
goods i. Marketing
i. Buying research
ii. Accounts
ii. Assembli ii. Packing, iii. Corresponden
grading, and ii. Advertising
ng ce
branding iii. Sales
iv. Filing and
iii. Control of promotion
records
stock iv. selling
v. Staff
iv. Dispatch of management
goods
MANAGING DIRECTORS -
• PURCHASE DEPARTMENT – This depar tment buys goods in bulk from diff erent
manufacturers. Before buying goods, samples of products, catalogues and quotations
are obtained from manufacturers.

• STORAGE DEPARTMENT – This depar tment receives goods from products. Goods are
compared with the orders and invoices. Any discrepancy or damage is repor ted and
settled with the suppliers.

• SALES DEPARTMENT – This depar tment conducts marketing research to ascer tain the
nature and extend of market demand. This information is passed on to the purchase
depar tment.

• ADMINISTRATION DEPARTMENT – This depar tment is concerned with receipt of cash

from retailers and payment of cash to manufacturers. It also keeps accounts, records
and fi les concerning all the transactions of the fi rm.
ELIMINATION OF WHOLESALERS -

FOR ELIMINATION - AGAINST ELIMINATION -

1. Hig he r p ri c e s 1. Vital link

2. Ar t ifi c ial shor tag e 2. Specialization

3. Lac k of d i re c t c on t ac t 3. Wider distribution

4. N o ri s k be ar in g 4. Price stability

5. Economies of large scale

5. Trans f e r age n t s
6. Market information
6. Larg e re t ail e rs
7. Warehousing
7. sp e c ulat i ons