Here is a compilation of essays on ‘Wholesaler’ for class 11 and 12. Find paragraphs, long and short essays on ‘Wholesaler’ especially written for school and college students.
Essay on Wholesaler
Essay Contents:
- Essay on the Meaning of Wholesaler
- Essay on the Essential Characteristics of a Wholesaler
- Essay on the Classification of Wholesalers
- Essay on the Functions of a Wholesaler
- Essay on the Services or Role of Wholesalers
- Essay on the Elimination of Wholesalers
Essay # 1. Meaning of Wholesaler:
In wholesale trade, goods are purchased in large quantities of limited number of varieties of goods and are sold to the retailers.
The 1954 Census of Business (U.S.A.) defines wholesale trade as “marketing or selling merchandise to retailers, to other wholesalers, or to industrial, commercial, professional or other institutional users in contrast to selling to household consumers; to individual for personal use or to farmers.”
Following this definition of wholesale trade, the wholesaler may be defined as “one who sells to other middlemen, institutions and industrial buyers, usually in fairly large quantities. He sells to other dealers and to industrial buyers but does not sell to the ultimate consumers.”
A wholesaler is link between the producer and the retailer. This helps the producers in making bulk production and selling in large quantities to traders. A wholesaler does not come into direct contact with the consumer.
Essay # 2. Essential Characteristics of a Wholesaler:
The following are the essential characteristics of a wholesaler:
i. The wholesaler purchases in bulk quantities from the producers.
ii. He sells goods to retailers in small lots.
iii. He usually deals in only one commodity.
iv. He generally sells goods to the retailers on credit.
v. Wholesale trade requires a huge amount of capital.
vi. His profit margin is very low.
vii. He provides financial help to both producers and retailers.
viii. He does not display goods at the shop but keeps them in the godowns.
ix. A wholesaler is a link between the producer and the retailer.
Essay # 3. Classification of Wholesalers:
According to W.J. Stanton, wholesale trade includes the sale and all activities directly incidental to the sale of products or services to these who are buying for the purpose of resale or business use.
Thus, wholesalers are the marketing middlemen who buy and resale merchandise to retailers and other merchants and to industrial, institutional, and commercial users, but do not sell insignificant quantities to the ultimate consumers. They occupy a midway position between the retailer and producer.
They generally buy goods and commodities in large quantities with a view to selling then to the retailers who further sell then to individual consumers on piecemeal basis. They, in general, operate for profits oily. They do not manufacture products but act as traders engaged only in buying and selling activities. But sometimes, sate wholesalers carbine manufacturing and retailing operations also.
The classification of wholesalers may, therefore, be made on the basis of:
i. Functions,
ii. Geographic area Served, and
iii. Services Rendered.
i. Functional Classification of Wholesalers:
According to the functions, the wholesalers may be of three types as follows:
(a) Manufacturer Wholesalers:
They are those merchants who combine manufacturing and bulk selling operations. In addition to the sale of their own products to the retailers and industrial users, they make large-scale purchases from the other manufacturers, carry a comprehensive stock of goods, and sell them to the retailers. This way, they can reduce the overhead expenses and increase the turnover and profits.
(b) Retail Wholesalers:
They buy goods in large lots from the primary manufacturers and retail them to the consumers through their own shops set up in different areas. In other words, they combine the twin functions of retailing and wholesaling.
(c) Wholesalers Proper:
They are the merchants who purely carry on the business of buying and selling in large lots without any engagement in either manufacturing or retailing activities. They function like distributors.
These wholesalers can be further classified as:
(i) Mill supply wholesalers,
(ii) Single line wholesalers, and
(iii) Complete line wholesalers.
The mill supply wholesalers purchase and stock wide variety of goods for ultimately selling than to the mills and manufacturers for the production of consumer goods. They are useful on account of their services to the business community and to the industrial consumers. They operate their activities by sending salesmen to the manufacturers in various parts of the country.
The single line wholesalers deal in different varieties in a particular line of goods, such as paper, hardware, etc. They sell their particular line of products to the retailers mainly. In a word, they specialise in single line and render services to all types of buyers of the same line.
The complete line wholesalers specialise in supplying goods to particular industry or trade whatever variety or type may be required by them. For example, certain wholesalers expertise in supplying instruments and health-care materials to the hospitals.
ii. Geographical Classification of Wholesalers:
According to the geographic areas served, wholesalers may be of three types as follows:
(a) Local Wholesalers:
Their activities are limited to a particular town or city and they engage in the distribution of nationally advertised products mainly.
(b) District or State Wholesalers:
They sell their goods to the retailers within the jurisdiction of a State or a district.
(c) National Wholesalers:
They operate their selling activities all over the country and thus, cover the functions of a local or district wholesaler.
iii. Classification Based on Services:
According to the nature and kind of services rendered, wholesalers may be of the following types, such as:
(a) Importers:
They specialise in imparting goods from foreign countries far selling than to the own country wholesalers or retailers or manufacturers.
(b) Exporters:
They specialise in exporting own-country goods to the foreign countries, and thereby render- national services in foreign exchange earnings by creating demands in the foreign market.
(c) Jobbers:
They are a kind of pure wholesalers who buy goods firm the manufacturers for effecting sales to the retailers.
(d) Processors:
They engage, in grading and processing of goods bought form the producers or manufacturers for effecting sales in small lots, sometimes using their own brands.
Essay # 4. Functions of a Wholesaler:
A wholesaler performs the following functions in the process of distributions of goods:
i. Assembling and Buying:
A wholesaler buys goods from producers who are scattered far and wide and assembles them in his warehouse for sale to the retailers.
ii. Storing or Warehousing:
After assembling the goods, a wholesaler keeps them in his warehouse. He supplies the goods in proper and required quantities as and when required by the retailers.
iii. Transporting:
Wholesalers purchase the goods in bulk quantities from manufacturers and transport these goods to their own godowns. Also, they make arrangements for the transportation of goods from their godowns to the retailers’ shop.
Since wholesalers buy goods in bulk quantities, therefore they can avail the economies of freight on bulk purchases. Wholesalers may own their own means of transport or may hire transport services from outside contractors.
iv. Financing:
A wholesaler also finances retailers by providing credit to them. He also finances the producers by giving them money in advance.
v. Risk-Bearing:
Risk is involved whenever goods are owned. A wholesaler bears all the risks arising out of a sudden fall in the prices, or by way of damage, deterioration in quality, spoilage, theft or loss by fire of goods kept in his godown. The risk of non-payment by the retailers to whom goods are sold on credit also falls on the wholesaler.
vi. Grading and Packing:
Wholesalers sort out the goods of different grades according to their quantity, size, etc. and then pack them in the appropriate containers for selling them to retailers. Thus, the marking functions of grading and packing are also performed by the wholesalers.
vii. Providing Market Information:
Wholesalers provide market information both to producers and retailers. They provide information to the retailer about the goods which are available in the market, whereas the producers are informed about the changes in the tastes, fashions and buying habits of the consumers.
viii. Pricing:
With the help of the retailer, the wholesaler fixes the viable price for the commodities.
ix. Dispersing and Selling:
The goods assembled by the wholesalers only to be distributed among the retailers who are scattered far and wide. Whenever retailers find their stocks depleted, they purchase goods in small lots from wholesalers to replenish their stocks. Thus, wholesalers provide help to dispersion process of marketing.
In the field of marketing, the wholesalers in general perform the following functions, namely:
i. They collect and assemble varieties of a product from various manufacturers for effecting sales to the retailers.
ii. They undertake distribution or dispersal of products to the retailers or industrial consumers who are widely scattered.
iii. They transport the goods from the producing centres to their own warehouses far stock purposes before sales and form those warehouses to the retail stares.
iv. They provide credit facilities to the retailers and thus finance the retail trade.
v. They, in most cases, undertake gradation of products according to quality and also do packaging into smaller lots for the retailers.
vi. They assume the risks arising out of changes in demand and spoilage or destruction of goods in their warehouses.
vii. They determine the prices of products based on which the retailers fix their prices to be charged from the consumers. This is generally the practice in case of produce.
Essay # 5. Services or Role of Wholesalers:
I. Services towards Producers or Manufacturers:
i. Marketing Function:
Wholesaler helps the producer to concentrate on the production only by relieving him from the botheration of supplying goods to retailers in small quantities.
ii. Bulk Orders:
The wholesaler purchases in large quantities. Thus he enables the producer/manufacturers to get the advantage of economies of large scale production.
iii. To Provide Market Information:
Wholesaler provides market information to the producer about the consumer behaviour, the changes in the tastes, fashions and buying habits of the consumers.
iv. Financial Assistance:
Wholesaler renders financial assistance to the producers/manufacturers. He either buys on cash or gives advance to the producers. The producers need not block their capitals in the stocks.
v. Price Stabilisation:
Wholesalers help in price stabilisation. They stock goods in the slack season and sell them when the demand is high. Thus, fluctuations in prices are prevented.
vi. Free from Stock:
Wholesalers relieve manufacturers from keeping stocks since they generally make forward dealings with manufacturers.
vii. Production Planning:
The wholesalers usually give bulk orders in advance. Thus production can be properly planned and scheduled. Changes in the product designs, etc. can be made in time.
viii. Risk-Taking:
Wholesaler undertakes risks in dealings in the goods produced by different producers.
ix. An Important Link:
Wholesaler is an important link between producers and the retailers.
II. Services towards Retailers:
i. To Provide Credit Facilities:
Wholesalers provide financial help to the retailers. This is done by allowing credit to the retailers. Retailers buy goods from wholesalers on credit and make payment to them after receiving money from their customers.
ii. To Provide Market Information:
The wholesaler provides market information to the retailers about the types, price and quality of the goods.
iii. Notice of New Products:
The wholesaler brings to the notice of retailers new products through advertisements, etc.
iv. Benefit of Advertisements:
Wholesalers make advertisements of the goods. It enables the retailers and consumers to get the complete knowledge about the goods. Consequently, retailers get new market for that product without any specific efforts.
v. Retailers Need Not Contact Different Manufacturers:
Since the wholesalers are in the market, retailers need not to contact with different manufacturers. Wholesalers keep stocks of products of different manufacturers. The retailers need not purchase from different manufacturers.
vi. Transport Facilities:
Big wholesalers provide transport facilities to the retailers by providing shop delivery.
vii. Free from Stock:
The wholesalers relieve retailers from keeping huge stocks with themselves since a retailer can approach a wholesaler from the replenishment of his stock whenever they are exhausted.
viii. Advantage of Favourable Fluctuation in Prices:
Wholesalers help the retailers to take the advantage of favourable fluctuations in prices.
III. Services towards Society:
i. To Make Goods Available According to the Taste of Consumers:
Wholesalers make available the goods according to the needs, tastes, fashions and demand of consumers.
ii. To introduce New Products:
Wholesalers inform the consumers about new products from time to time through advertisements.
iii. Stability in Prices:
Wholesaler maintains stability of prices by adjusting the demand and supply factors of the economy.
iv. Convenient Purchasing:
Consumers can purchase from wholesalers small quantities of goods on the basis of their requirements.
v. Reduction in Selling Price:
Wholesalers place large orders and thus enable the producers to produce at a large scale which means reduction in the cost of production and selling price.
Essay # 6. Elimination of Wholesalers:
Arguments in favour and against the elimination of wholesalers are discussed below:
Arguments in Favour of the Elimination of Wholesalers:
Now-a-days some people are of this opinion that ‘Wholesalers are nothing but social parasites and the sooner they are eliminated the better for society.’
They put the following arguments in favour of elimination of wholesalers:
1. Higher Prices:
Wholesalers are responsible for manipulating the prices of the commodities. They charge higher profits for their services which increases the cost of product and it adversely affects the ultimate consumers.
2. Artificial Shortage:
Wholesalers create artificial scarcity of the commodities by holding the stocks. They sell commodities at higher prices and make good profits. Thus if such wholesalers are eliminated, the consumers would be favourably affected.
3. Encouragement to Departmental Stores and Multiple Shops:
Due to large scale production, the establishment of departmental stores and multiple shops is getting encouragement. They are in direct contact with the consumers and there is no need of wholesalers.
4. Assumption of No Risk:
Wholesalers do not bear the trade risks arising from strikes, lockouts, etc. It is the consumer who suffers.
5. No Personal Development:
Wholesalers do not allow the development of personal relations between manufacturers and consumers. If wholesalers are eliminated then this relationship can be established and maintained.
6. Speculation:
Wholesalers engage in speculative activities to the detriment of the interests of the consumers. If such wholesalers are eliminated then the interests of the consumers can be safeguarded.
Arguments against the Elimination of Wholesalers:
The following points can be put forth in favour of continuance of wholesalers:
1. To Provide Valuable Information:
Wholesalers provide valuable information to the producers regarding tastes, habits and fashions of the consumers so that producers may adjust their production accordingly.
2. To Provide Credit Facilities:
Wholesalers provide credit facilities to the retailers. Retailers need not to invest huge capital in the business.
3. Price Stabilisation:
They help in price stabilisation. Thus, the existence of wholesalers is essential for both retailers and ultimate consumers.
4. An Important Link:
Wholesaler is an important link in the chain of distribution of goods. Hence, his existence is essential for the continuance of the business.
5. Numerous Services and Functions:
The services and functions of a wholesaler are numerous and indispensable for the easy and smooth flow of goods from the producers and to the ultimate consumers.
Thus we can say that the wholesaler plays an important role in the business activities and maintains the regular chain of supply of goods from the producers to the ultimate consumers. So the existence of wholesaler is essential.