WHOLE SALE TRADE

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    • Role of Whole Sale Trader:

    From this figure above, you can see the demands of the retailers are completely contrary to the conditions of manufacturers. Therefore, there has to be a middle man who can fill this gap. This role is played by wholesalers.

    • Decline in Wholesale trade:

     

    1. The growth of manufacturers who like to sell their product directly to consumer – they can sell their products at lower prices and absorb the profit of retailer and wholesaler
    2. Increase in number of large scale retailers who can afford to buy directly from manufacturers

     

    • Functions of Wholesaler:
    1. Warehousing:

     

    A warehouse is a place where large quantities of goods can be stored. Wholesalers provide this facility to both manufacturers and retailers.

     

    1. Marketing:

    Some manufacturers focus on manufacturing only – they give goods to wholesaler on cheaper rates and ask them to bear the expenses of advertising these goods. However, some manufacturers advertise for their goods themselves.

    1. Reservoir:

    Wholesalers keep all types of goods so that retailers do not have to go to different wholesalers to get different products. It saves the time and effort of retailers.

    1. Price Stability:

    Wholesalers ensure the reliable supply of those products which are produced in one season only

    1. Delivery:

    Wholesalers usually deliver directly to the retailer’s doorstep so retailers just need to place orders. This saves them the transportation cost.

    1. Risk Bearing:

    Some products depend on fashion and taste so wholesalers bear a huge risk by stocking such products in bulk.

    • New Trends in Wholesaling:

    Cash and Carry:

    • Large wholesale stores
    • Do not offer credit to retailers
    • Are not responsible for delivering goods to retailers
    • Buy in bulk
    • Sometimes they sell with the consumers directly too

     

    • Intermediaries:

     

    They are the people involved in the distribution of goods from the producer to final consumer

     

     

     

     

    Mercantile agents work on a commission basis. They can be sub divided into 2 types, factors and brokers.

     

    Factors Brokers
    Concerned with the sale of goods delivered to him by the principal Concerned with the sale or purchase of goods or services for the principal
    Has possession of the goods of principal Does not have possession of the goods of principal
    Remunerated with commission Remunerated with brokerage
    Can make a profit from sales Cannot make a profit from sales
    Can sell the goods in his own name Cannot sell the goods in his own name

     

    Merchants are general purpose wholesalers. They buy from the manufacturer in bulk at low prices and sell to the retailer in small quantities thus making a profit.

    A “Forwarding Agent” is appointed by the Principal for the collection and shipment of his goods for export or arrangements to dispatch imports.