Simply stated, wholesalers are those who happen to he engaged in wholesaling or wholesale trade. In a broad sense, any individual or business fim,selling goods in relatively large quantities to buyers other than the ultimate consumers may be called a wholesaler. Thus manufacturers w$o sell their products directly to retailers may be regarded as wholesalers. However. in a more specific sense the term wholesaler may be defined as a merchant middleman eagaged in buying and reseliing of goods to retailers andother merchants. or to industrial or commercial users. Wholesalers do not sell [he products to ultimate consumecs. The wholesalers belong to the categoiy of merchant middlemen who acquire title to the goods they handle. Agents or brokers may also act as wholesale middlemen but they do not acquire the title to goods. Wholesalers act as middlemen between producers or importers of goods on [he one hand, and retailers or industrial users on the other. The goods lradcd by wholesalers may include agricultural commodities, forest products, minerals as well as manufactured goods.
IMPORTANCE OF WHOLESALERS
Manufacturing companies often do not have adequate capital to employ salesmen to contact the large number of retailers. Many small retailers run their business in remote areas and to contact them may be too expensive. Morover, small retailers generally prefer to buy products in small quantities due to their limited capital, lack of market information and sources of supply. The wholesalers solve the problems of manufacturers as well as small retailers. A wholesaler can place sufficiently large order with the manufacturer kecping in view the requirements of a number of small retailers in his area. In that process, the wholesaler is in a position to meet the small orders of retailers.
From the society point of view, distribution of goods may be efficient because bf the specialised knowledge and skill of wholesalers. On the other hand, manufacturers can concentrate on efficient production of goods. Naturally, they do not undertake the distribution of their products because their efficiency in manufacturing would suffer on account of divided attention.
TYPES OF WHOLESALERS
Wholesalers, may deal in a large or limited variety of products, restrict their activities mainly to wholesaling or perform various functions incidental to their trade, and may operate in small or large geographical territories. Accordingly, wholesalers may be classified on three different bases: (1) merchandise dealt with, (2) method of operation, and (3) coverage of geographical area. Look at Figure 11.1 for classification of wholesalers.
On the basis of goods dealt with by the wholesalers we may distinguish three types of wholesalers:
i) General merchandise wholesalers-those who deal in two or more unrelated types of products. For instance, a wholesaler may deal in a number of consumer durables like, electrical goods, sports goods, cosmetics, hosiery, etc.
ii) General-line wholesalers-those who cany a number of goods in the same produ# line. For instance, a wholesaler may carry convenience goods of daily household necessity like soaps, detergents, toothpaste, razor blades, etc., or may stock cereals/and provisions like wheat, rice, dal, etc.
iii) Single-line or speciality wholesalers- those who restrict their operation to a narrow range of products 01. specific products. Wholesalers dealing in a few varieties of textiles (cloth), or carrying varieties of printing paper only may be called speciality wholesalers, or single-line wholesalers.
Method of Operation
On the basis of the method of operations, wholesalers may be divided into two categories:
i) Service wholesalers-those who perform a variety of functions like advertising, grading, branding, packaging, etc., on behalf of manufacturers and retailers.
ii) Limited function wholesalers-those who undertake to carry out a few limited functions, like packaging or grading.
On the basis of the geographical coverage of dealings, wholesalers may be grouped into three types:
i) Local wholesalers-those who restrict their operation to a particular city or town and supply products to retailers in that area.
ii) District wholesalers-those who have dealings with retailers located in a district.
iii) Regional or national wholesalers-those who specialise in products having a national market and are nationally advertised. They have dealings with retailers located in a region or a country.