What are the Functions of Wholesalers?

Wholesalers are the organisations that buy and resell products to other resellers like retailers, other merchants or to industrial buyers, and not in significant amount to end users. They take title to the products they trade in. They buy the products in large quantities and break down the bulk basis the requirement for distribution to retailers, etc. They provide range of services to buyers as well as manufacturers like transportation, buying on credit, etc.

Below are the major functions of Wholesalers-
1. Buying and assembling – The wholesalers buy products from various manufacturers and assemble them for supply to retailers. They store these products in their warehouses, and ensure supply of product as per demand in particular region.

2. Warehousing – The wholesalers not only buy products but also store them in their warehouses. The quality of the products is kept intact. The products are shipped to retailers on time, basis the demand ensuring the time lag between manufacturing and consumption is efficient and effective. The products reach the consumers as intended by the manufacturer without wear and tear.

3. Breaking the bulk – It is not feasible for manufacturers to manufacture and supply products in small quantities in the target market. The job of breaking the bulk is done by wholesalers. The consumers buy products for household purposes in small quantities. This helps retailers in storing products in small quantities to meet the demand of the consumers in the marketplace. When the stocks of the retailers are exhausted, the retailers approach the wholesalers to buy products in small quantities.

4. Dispersing of products to retailers scattered in the target market – the wholesalers help in dispersing the products all over the market to the retailers. This helps manufacturers as the task of dispersing the products is no longer with them and they can focus on other marketing functions. The wholesaler becomes a source of all buying for the retailers. The retailers don’t have to contact the manufacturer.

5. Source of market information – The wholesalers are important source of information for the manufacturers. The information about demand, competitors, customer preferences as well as substitute products is available with wholesalers. They receive this information from the retailers. Not only they receive information, they also disperse information from the manufacturers to retailers as well as other players in the market. For example, launch of a new product by a manufacturer, market position of a manufacturer, etc.

6. Financing – The wholesalers do business on credit with retailers as well as manufacturers. The retailers receive the goods on credit which helps new retailers in the market who cannot buy products by giving large sums of money. Similarly, wholesalers give advance money to the manufacturers for the products that will be received later by them. This function helps in easy flow of products even when the money is not immediately exchanged.

7. Grading and Packaging – The wholesalers not only break the bulk, but also package the goods in small quantities and grade the quality on the packaging. This is a very important marketing function which helps consumers make decisions.

8. Transportation – The wholesalers buy products from wholesalers and ship them to their warehouses and godowns. From there, the products are supplied to the retailers, etc. They may employ their own vehicles for transportation. As the wholesaler is in touch with the retailers, the supply is also done effectively (on time) and efficiently (lowest cost possible).

9. Risk bearing – Products are exposed to many risks like destruction – natural as well as unnatural disasters. They can get spoiled during transportation, climate change or may even get spoiled if not sold before the expiry date. The products also bear a risk of not sold because of less demand, reduced prices of competitor or substitute products. As the manufacturer has already sold the product to the wholesaler, this risk is borne by the wholesaler. To avoid such risks wholesalers carefully buy products in right quantities and opt for insurance of different kinds.

10. Advertising – The wholesalers also do advertising of new products via distribution of pamphlets, hoardings, mouth publicity, Television ads, etc. This helps manufacturers in market growth. The consumers learn about product launches and its benefits which helps them in making proper decision when buying a product.

The functions of wholesalers also varies basis the kind of wholesaler. They are as below-

a) Full function wholesaler – they buy products/goods from manufacturers and sell them to other resellers like retailers, traders, etc. below the marketing or distribution channel. They buy in bulk from different manufacturers, break down the bulk, store, sell the smaller lots for cash or credit, and also helps with information (advice, education, etc.) to whom he sells. As they take title to the products, they are also responsible for the risk factor involved.

b) Converter wholesaler – as the name suggests, they buy the products in bulk, process them before selling them to the following channel members. For example, a wholesaler buys textile and bleaches it before selling it to other merchants.

c) Industrial wholesalers – they sell the products to manufacturers instead of retailers.

d) Drop shipper wholesaler – a drop shipper wholesaler doesn’t handle the product. They take orders and coordinates with the manufacturer to deliver the goods directly to the retailer or other merchants in the channel. As they take the risk of the products, they need to handle the products in case the retailer, etc. cancels the order. They trade in bulk like coal, sand, lumber, etc.