Posted in Finance, Accounting and Economics Terms, Total Reads: 1018
The wholesalers along with the retailers act as intermediary between the manufacturers and the consumers. They facilitate the distribution efficiency for the retail system on a large scale as well as cater to the post purchase requirements. They not only organise the distribution system but also reduce the various distribution costs.
They basically act as consumer touch points.They also provide additional assistance to the manufacturers in the following ways :
They along with the retailers play a major role in fixing market prices for the items.
They are the major point of sales so they also provide valuable feedback on the products on the shelf.
They also inform the manufacturers about the changing consumers’ tastes and choices.
They also help the manufacturers in the new product development process.
They also reduce the inventory carrying cost due to large holdings for the retailers.
There are 3 main types of wholesalers:
2. Brokers & Agents
3. Manufacturer’s Sales Branches & Offices
Merchants are the most common types of wholesalers. Merchant wholesalers can be further divided into full service wholesalers and limited service wholesalers. Merchants keep non-competing product lines and may specialise in product line or customer type they wish to serve. They buy and keep the products in their warehouses.
Brokers & Agents do not own the products they keep in their inventory. They only warehouse products to be further sold and this transaction occurs through the brokers & agents between the producer and the retailer. They may also specialise in product line or customer type. Manufacturer’s agents are the most common kind of agent wholesaler. Brokers and Agents gets buyers and sellers together and help facilitate negotiation but themselves do not buy or own the products they store.
Manufacturer’s Sales Branches & Offices are wholesalers that are not 3rd party wholesalers but the wholesale warehouses owned by the manufacturing company itself.