Wholesale trade:

• A trader who purchase goods in large quantity from the producer and sells them to retailers in small quantities as per their requirements is called a wholesaler and the trade is called wholesale trade.
• A wholesaler serves as a link between the producer and the retailer. Wholesalers provide various services to producers and retailers.

They are as follows:
(A) Services to producers:
1. Orders large quantity:

A wholesaler receives orders from various retailers. It then places a large order to the producer and helps the producer in large scale sales.

2. Information about market:

• A wholesaler is in direct contact with several retailers spread across a vast geographical region.
• This helps him to obtain information about demand of the product, its feedback, customer’s preference, fashion, etc. of various regions. The wholesaler then shares this information with the producer.
• The producer thus gains insight about market trend and market situation and keeps his product updated as per the market.

3. Freedom from storage of goods:

• Wholesaler orders goods in large quantity and stores them in his own godowns.
• This saves producers from owning unnecessarily large godown for storage.

4. Freedom from sales worries:

Wholesaler purchases goods in large quantity. This saves producers from selling goods in smaller quantities to several people. For example, 10 retailers in total may need 500 books. One the other hand a wholesaler alone can buy 500 books and supply them to those 10 retailers.

5. Relief of capital:

At times either producer can ask for advance payment from wholesalers or wholesalers themselves may pay in advance to the producers as per trade policies or to assure that wholesaler would receive their order quantity on time. This helps producers to maintain less working capital. ‘

6. Freedom from the risk:

• Wholesalers purchase goods in large quantities. The storage and maintenance of goods then becomes their liability.
• On the other hand producers become free from risk of goods getting diminished, wasted, destroyed, expired, etc.

(B) Services to retailers:

1. Supplies goods as per retailer’s requirement:

Wholesalers take orders from retailers and supply them as per their need. This saves retailers from having large storage spaces.

2. Goods on credit:

At times, wholesalers sell the goods to retailers on credit. This motivates retailers to conduct and expand their business with quite less capital.

3. Decrease advertisement expenses:

Apart from producers wholesalers also advertise the products to promote sales. This helps retailers to save their advertisement costs.

4. Redressal of complaints:

• Retailers are in direct contact with customers. If customers have any complaints regarding a product then they complain to retailers,
• Retailers pass these complains to wholesalers and wholesalers pass them to producers and solve complaints quickly.

5. Freedom from risk:

Wholesaler stores goods in large quantity and retailers have an option to buy them as per their demands. This help retailers to free from risk of goods getting diminished, wasted, destroyed, expired and price fluctuation.

6. Guidance:

Wholesaler has a large network of retailers of various types belonging to various areas or regions. So, wholesaler possesses a rich knowledge and information about a vast market. He shares his knowledge with retailers which work as guidance for them to increase their business.