Wholesalers and retailers are the two important types of middlemen forming a part of the distribution channels. They act as an intermediary link between the manufacturers and the consumers of goods. They specialise in providing a wide range of services for both the producers as well as the consumers. They reduce the amount of efforts required by the manufacturer in distributing his product to the final consumers and provide a vast market coverage to his products. They greatly increase the efficiency of exchange and lead to reduction in total cost of distribution of products. They provide ready delivery of goods to the consumers at places convenient and accessible to them. They also provide aftersale services and handle consumer grievances. They also act as a communication channel by providing information about the products to the consumers,on one hand, and the consumer feedback to the producers on the other hand.
Wholesaler may be defined as the middlemen who operates between the producers (from whom they purchase goods) and the retailers (to whom they sell goods). Wholesaler refers to any individual or business firm selling goods in relatively large quantities to buyers(retailers) other than the ultimate consumers. Thus the manufacturers who sell their products directly to retailers may also be regarded as wholesalers. The specialised knowledge and skill of wholesalers increases the efficiency of the distribution network. The wholesalers provide important services and solve the problems of both the manufacturers and the retailers.
Services provided by the wholesalers to the manufacturers:-
- They place orders for the product in advance on the basis of expectations regarding the demand for the product. This enables the manufacturer to plan his production and secure the economies of scale.
- They may also provide transportation facility by carrying goods from producers to godowns and then to retailers.
- They perform advertising and sales promotion activities and also employ expert sales representatives for the purpose.
- They provide financial accommodation to manufacturers in the form of cash payments for goods purchased from them as well as provide credit to them.
- They keep the manufacturers updated on the changes in customers' habits, tastes, preferences and fashion.
- They also play an important role in fixation of the final prices of the goods.
Services provided by the wholesalers to the retailers:-
- They act as the retailers 'buying agent' and saves them from the trouble of searching out and assembling goods from several manufacturers.
- They inform the retailers about the new products, its uses and changes in their prices. They also assist the retailers in advertising and selling of the products.
- They provide financial assistance to retailers, sell goods on credit to retailers and thus help them to operate with small working capital.
- A wholesaler being the ware-house keeper of the market, they protect the retailers from the risk of loss arising from holding large stocks of the product.
- They may also sort out different grades of products according to quality and pack the goods into small lots for the retailers.
Retailing refers to all the transactions which involve sale of goods or services to the ultimate consumers. A retailer is a middleman who procures goods from the wholesalers and sell it to the final consumers. They form a vital link in the channel of distribution of products because without him, neither the products would sell to distant places nor would it be possible for consumers to buy goods of their choice in shops located nearby. They have a much stronger personal relationship with the consumers and deal directly with the people of varied tastes and temperaments. They form the last link in the chain of distribution and give the final selling price to the product. The retailers provide important services and solve the problems of the manufacturers and wholesalers on one hand and the consumers on the other hand.
Services provided by the retailers to the wholesalers and manufacturers:-
- They provide selling outlets to wholesalers and manufacturers.
- They save the manufacturers from the inconvenience and expenses of selling the goods in small lots to a large number of consumers.
- They communicate the needs and desires of consumers to the manufacturers.
- They may also arrange for transportation of goods from the wholesalers' godowns to the ultimate consumers.
- They may also perform storage function by keeping stocks of goods.
Services provided by the retailers to the consumers:-
- They anticipate the needs of consumers and accordingly assemble goods of different varieties. Thus they satisfy their demands and provide them a wide choice of goods.
- They sort out goods supplied by the wholesalers and keep them in convenient packages for the benefit of the consumers.
- They even act as an advisor and guide to the consumers by bringing new products to their notice and educating them about its diverse uses.
- They keep the consumers informed about the changing trends in the market about the different varieties of products.
- They also provide other services to the consumers such as free home delivery, aftersale services,credit facility,etc.
Retailers are of different types depending upon their scale of operation and location. They are broadly classified into two categories:-