Services rendered by wholesalers

Answer 1

The major services offered by wholesalers to the producers of goods and services are given as below:

(i) Facilitating large scale production: Wholesalers collect small orders from number of retailers and pass on the pool of such orders to manufacturers and make purchases in bulk quantities. This enables the producers to undertake production on a large scale and take advantage of the economies of scale.

(ii) Bearing risk: The wholesale merchants deal in goods in their own name, take delivery of the goods and keep the goods purchased in large lots in their warehouses. In the process they bear lots of risks such as the risk of fall in prices, theft, pilferage, spoilage, fire, etc. To that extent, they relieve the manufacturers from bearing these risks.

(iii) Financial assistance: The wholesalers provide financial assistance to the manufacturers in the sense that they generally make cash payment for the goods purchased by them. To that extent, the manufacturers need not block their capital in the stocks. Sometimes they also advance money to the producers for bulk orders placed by them.

(iv) Expert advice: As the wholesalers are in direct contact with the retailers, they are in a position to advice the manufacturers about various aspects including customer's tastes and preferences, market conditions, competitive activities and the features preferred by the buyers. They serve as an important source of market information on these and related aspects.

(v) Help in the marketing function: The wholesalers take care of the distribution of goods to a number of retailers who, in turn, sell to large number of customers spread over a large geographical area. This relieves the manufacturers of many of the marketing activities and enable them to concentrate on the production activity.

(vi) Facilitate continuity: The wholesalers facilitate continuity of production activity throughout the year by purchasing the goods as and when these are produced.

(vii) Storage: Wholesalers take delivery of goods when these are produced in factory and keep them in their godowns/warehouses. This reduces the burden of manufacturers of providing for storage facilities for the finished products.