Question

2. Explain what a wholesaler does. How does this benefit the retailer? How does this benefit the manufacturer?

Answer 1

A wholesaler is an intermediary merchant, can be someone or a company that connects companies to retailers and sometimes directly to consumers. They buy a bulk of products from companies or manufacturers, warehouses, advertise products and services at lower prices or at discounted prices, or repackage them in smaller quantities, breaking up the bulk of their products and then selling them to retailers at a low price.

By repackaging bulk products in smaller quantities, wholesalers benefit retailers so that they can meet their customer requirements. It saves retailers from repackaging costs and also saves time. Wholesalers also advertise their products to make retailers and consumers more aware of them in general. Thus the advertising costs are not incurred by a retailer. Warehousing offers wholesalers a further advantage because they store, preserve, and deliver products when they require them to be delivered; therefore, retailers do not require the cost of storage. The wholesaler offers after-sales services such as transport of the goods to a retailer's place and offers the delivered products' offloading services.

Wholesalers benefit producers by managing risks such as product damage and expiry during storage, and in such instances, they suffer the loss. They also brand the manufacturer's products in various forms and packages to help the product stand out from the products of the competitors. The manufacturer is saved from warehousing costs by wholesalers as the product is purchased in bulk, thus the economy of size. The wholesalers are helping the manufacturer to stabilize prices for the products through storage in the recession or slack period during the peak period.