Wholesaler and Retailer Meaning, Functions, Services and Difference | Principles of Marketing Notes CBCS Pattern | B.Com 5th Sem Hons

Wholesaler Meaning

Wholesale trader is one who sales to other middlemen, institutions and individuals a fairly large quantity. According to American Management Association, wholesalers sells to retailers or other merchants and/or individual, institutional and casual users but they do not sell in significant amounts to ultimate consumers. Wholesale trade is to do with marketing and selling merchandise to retailers, wholesalers or to individuals commercial and professional or other institutional contrast to household consumers, to individuals for personal use.

Retailer Meaning

Retailer is one whose business is to sell to consumers a wide variety of goods that are assembled at his premises as per the needs of final users. The term retail signifies sale for final consumption rather than for resale or for further processing. A retailer is the last link between the final user and the wholesaler or the manufacturers.

In the words of Professor William Staton,”Retailing includes all activities directly related to the sale of goods and services to the ultimate consumers for personal or non-business use”

Thus, retailer is that merchant intermediary who buys goods from preceding channel members in small assorted lots and sells them in the lot requirements of final users.

Functions of wholesalers

Wholesale traders perform a number of functions in the process of selling the goods. Of them the most important ones are:

1. Assembling and Buying: Assembling implies the collection of small lot of agricultural production for economic bulk buying; it also means bringing together different manufacturers producing same line of goods. Buying‘comprises of selection of manufacturers and placing orders on them and making purchases in cases of seasonal products.

2. Warehousing: Warehousing or storing is closely related to the function of storing. As there is always a gap between the time periods of production and consumption, the goods are to be held and preserved. This involves capital lock-up. This ware housing by wholesalers relieves both the producers and the retailer’s problems of storage.

3. Transporting: In the processes of assembling and warehousing and resale, do undertake transportation of goods from producers to their warehouses to the retailers. What is important is that this transportation is done on economic lines, either through their own fleet or through hired common carriers.

4. Financing: Wholesalers undertake marketing financing. They grant credit terms to retailers on one hand and reduce the financial burden of the by taking early delivery of stocks from them. The very fact that the creditors grant credit is as good as reducing the credit quota of manufacturers to wholesalers.

5. Risk Bearing: Risks are inherent in business which are to be borne and wholesalers bear the risks of loss of change in prices, of damage, deterioration, pilferage, theft, fire and the like of the goods held in storage. They also of non or under payment by the retailers. Risk shouldering is the part done.

6. Grading, packing and packaging : Grading is another function of wholesalers they sort-out the stocks in terms of differing sizes, qualities, moisture contents bulk-breaking is done with a view to meet the small lot requirements of manufacturers. In fact, they repack for the consumers as per the orders of the retailers.

7. Dispersing and selling: The goods assembled and held in stock are meant pricing and selling. It is the retailers who buy from the wholesalers. Similarly, do have their own sales-army moving to retailers for collection order.

8. Providing market information: Wholesalers are the vital link between producers and manufacturers. They provide relevant and up-to-date information to retailers affecting their trade interests; so also they reciprocate the same to manufacturers as to whatever retailers feed them on changing market conditions useful wholesalers.

Services of wholesaler

The wholesaler renders a number of services to trade, industries and commerce. The services rendered by the wholesaler may be classified as:

To Producers

1) The wholesaler provides valuable information to the producers regarding the needs and the requirement of the consumer.

2) As the wholesaler takes the responsibility of collecting order from retailers, he relieves the producers from this task and thereby encourage producers to concentrate on production.

3) The wholesaler provides finance to the producers at the time of need.

4) The wholesaler helps the producers in determining the quality and quantity of goods to be produced as he is in direct contact with the retailers.

5) The producers are helped to maintain steady prices for the product because wholesaler buys when prices are low and sell when prices are high.

To Retailers

1) The retailers are relieved of maintaining huge stock of goods because the wholesaler fills up the stock regularly. The wholesaler buys in large quantities and sell them at convenient lots to the retailers.

2) The wholesaler provides finance and credit facilities to the retailer and thereby relieves the financial difficulties of the retailer.

3) The wholesaler saves retailers from many types of risks. The retailer is not required to carry huge stock as he can get them from the wholesaler at regular interval. By extending credit has saved the retailers a lot.

4) The wholesaler provides valuable advices to the retailer on all matters relating to new product and market condition and thereby relieves him from collection of market data.

5) The wholesaler gives trade discounts on bulk purchase and as such it enables the retailers to earn handful amount of profit.

To Consumer

1) He enables the consumer to purchase required quantities of goods at the desired time because he supplies goods regularly to the retailers.

2) He provides goods at a cheaper rate because he facilitates in large scale production.

3) The wholesaler is in a better position to stabilize prices of the products by adjusting demand and supply. The consumers are benefited a lot on account of stabilization of prices.

4)  There is no shortage of goods as the wholesaler goes on large purchasing.

5) The wholesalers are wealth of information and as such this information are shared by the consumers.

Functions of Retailers:

Services of Retailer

Services to Wholesalers and Manufacturers

1) Retailers give manufacturers or producers access to markets by offering them the opportunity to present their products to consumers.

2) The manufacturer and the wholesaler are relieved of making individual sales to consumers in small quantities.

3) Retailers supply valuable and reliable information to wholesalers and manufacturers about the consumers' demands and the changes occurring in their likes and dislikes.

4) Information about the consumers' likes and dislikes received from the retailers through the wholesalers enable the manufactures to make suitable adjustments in the design, size and contents of their products. Thus they can manufacture right types of goods at right time.

Services to Consumers

1) As retailer holds stocks of goods ready for immediate use and he is prepared to sell in small quantities, the individual or household consumer is relieved of the burden of storing large quantities of every article of daily use.

2) Retailer provides consumers with a wide variety of choice. Retailers, by assembling products of different variety from different manufactures, enable consumers to make choice from a large variety of goods displayed in their stores.

3)  Retailers buy and stock goods suitable to the consumers.

4)  Retail shops are situated in convenient localities, usually very near to the consumers' residence.

5)  Retailers stock fresh goods to meet daily demands of their customers.

6)  They sell to consumers in quantities, which suit the pockets of different individuals.

7) Retailers make available to their customers goods of the sizes, styles, types, qualities and prices they prefer.

Difference between Wholesaler and Retailer:

1. Link: Wholesaler servers as a link between producers and retailers on the other hand, a retailer provides a link between wholesalers and consumers. Wholesaler is the first link, whereas retailer is the last link in the chain of distribution of goods.

2. Scale of operations: A wholesaler carries on business on a large scale and requires huge capital. A retailer, on the other hand, deals generally on a small scale and capital invested in retail trade in relatively small.

3. Range of goods: A wholesaler generally deals in one commodity. But a retailer deals in a large variety of goods and caters to the diverse needs of his customers.

4. Dealings: A wholesaler generally sells goods to retailers on credit. But a retailer usually sells goods to consumers on cash basis.

5. Location: A wholesaler can have a go down in a corner of the city and can supply goods there from. But the shop of a retailer needs to be located in the heart of the city to attract a large numbers of customers.

6. Profit margin: A wholesaler has not to spend money on shop decoration etc., and has a large volume of sales. Therefore, he charges a smaller margin of profit than that charged by the retailer.

7. Display of goods: A wholesaler need not display the goods. But a retailer has to display goods and decorate his shop in order to attract customers.

8. Purpose of selling: A wholesaler sells goods for resale. On the other hand, a retailer sells goods for ultimate consumption or use.