Definition of Wholesaling: Functions of Wholesalers


According to Philip Kotler___” Wholesaling consists of the sale and all activities in selling goods or services to those who buy for resale or business use”.

According to American Marketing Association__” Wholesalers sell to retailers or other merchants and or industrial, institutional and commercial users but they do not sell in the significant amount to ultimate consumers”.

According to S.E.Thomas___” The wholesalers or the wholesaler’s trader is a trader, who purchases goods in large quantities from manufacturers and resells to retailers in small quantities”.

The working principle of any kind of wholesaler is to generate optimum results for efforts taken. They generally have small margins and are expected to maximize the effectiveness of services offered and reduce inaccuracy in operations.

Functions of Wholesalers

  1. Sales and Promotion: Wholesalers have their very own salesforce. Wholesalers render the services of their salesforce to the manufacturers to help them reach several business customers operating at a relatively smaller scale at a reasonable low cost. As wholesalers have good contacts, it is usually observed that purchasers rely on them more than a remote manufacturer.
  2. Buying and Assortment Building: A substantial amount of work a customer does is done by a wholesaler on their behalf by way of choosing the products and preparing a mixed bag of all those products as needed by the customer.
  3. Bulk Breaking: Wholesalers can save big time for their buyers through purchasing products in bulk, i.e., large carload stacks, and then dividing this bulk into smaller units as per individual requirements.
  4. Warehousing: The suppliers and customers do not have to bear the inventory costs because wholesalers hold inventories, which decrease inventory costs as well as the risks associated with them.
  5. Transportation: Because of selection of a prime location for conducting business, a wholesaler can generally deliver the goods faster to the buyers as they are located closer to them.
  6. Financing: Wholesalers finance suppliers by adopting the policy of early ordering and paying all the bills punctually. They also finance customers by granting credit.
  7. Risk Bearing: As wholesalers own the title of the manufacturers, they bear the risk of all the consequences. Cost of all kinds of flaws is borne by wholesalers.
  8. market Information: One of the most important functions of the wholesaler is that it provides important market information to retailer and manufacturer, which help the retailers about the demand of consumer and manufacturer so that he produces the goods according to the changes in the tastes and fashions of the consumer.

Importance of Wholesaling

To Manufacturers:

  1. Concentration on production
  2. Facilities for large-scale production
  3. Information about consumer behaviors
  4. Regulation of production
  5. Reliving producers from keeping stock
  6. Financial assistance

To Retailers:

  1. Relief from keeping a huge stock
  2. Financial help
  3. Not affected by price fluctuations
  4. Provision of information
  5. Transportation facilities
  6. Trade discount
  7. Benefit of specialization

To Society:

  1. Support to Economic Growth.
  2. Facilitating Mass Consumption.
  3. Contribution to Other Business and Employment.
  4. Sustaining Market Equilibrium.