Distribution of goods is one of the most crucial things that keeps the wheels of business rolling. And wholesalers play a vital role in it.
Since wholesalers are an agent between the manufacturers and retail businesses, it puts them in a pivotal place in the marketing channel. Although they perform a lot of crucial functions such as managing the flow of goods, ownership, and finance, etc., their main role in the larger supply chain is to buy merchandise in bulk and resell it to retailers and commercial users.
Wholesalers don’t usually deal with general consumers as their operations are largely limited to other businesses. This is due to the number of products being relatively larger and They mainly act as intermediaries between manufacturer and business establishments and leave dealing with the general consumer to the retailers.
Role of Wholesalers in the Distribution Channel
A wholesaler’s role in the distribution channel isn’t just limited to buying and reselling goods. Here are some of the function’s wholesalers are responsible for in the business scene.
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Acquiring Goods in Bulk
Wholesalers purchase goods from several manufacturers in bulk and then sell them to retailers. This is the core responsibility of a wholesaler but it benefits both the manufacturer and retailer alike.
Since it becomes quite hard for manufacturers to get in contact with retailers and send over goods, wholesalers come in and ease the process.
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Processing & Assembling
As discussed previously, it’s not easy for retailers to establish contact with manufacturers. Hence they deal with wholesalers instead.
A wholesaler is not limited to a single type of product or manufacturer. They can expand and diversify their products and deal with different manufacturers at the same time. This is a great way to add variety to their product line-up and attract more potential customers.
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Storage
After the goods are acquired, they don’t directly go up for sale in a Wholesale Marketplace. Before the selling phase, they are stored at a warehouse. From there, the goods are registered in an inventory system and dispatched as needed according to incoming orders.
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Moving the Cargo
Goods stored in a wholesaler’s storage facility needs to be transported to the retailers when an order comes through. It’s the job of the wholesaler to arrange bulk transportation of goods for retailers. Some wholesalers even have their own vehicles for this purpose alone.
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Item Categorization
Items acquired in bulk need to be processed and sorted according to their type, shape, size, and quality for optimal storage. These goods are broken into smaller quantities and repacked according to their brand name. This ensures uniformity of quality across all retailers.
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Handling Financial Matters
Wholesalers are responsible for financing the manufacturers themselves by providing the payment in advance when purchasing goods. It not only benefits the manufacturer but helps wholesalers secure goods early.
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Risk Analysis
Wholesaling is a risk if the purchasing and selling are done without any thought or strategy put into it. Since wholesalers are purchasing goods in bulk, anytime the demand goes low while their Inventory is high, it can inflict a huge toll on them.
While goods are stored in the warehouse, devaluation isn’t it’s only enemy. Weather conditions and natural disasters can disrupt the flow of distribution and inflict major loss. This is why wholesaling is a game of high risk, high reward.
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Marketing
If a wholesaler plans according to the market forecasts, not only does he/she avoid the risk of loss but also relay these market patterns to manufacturers. These market trends can be related to fashion, buying habits of customers, and demand spikes.
This way, goods can completely satisfy the needs of consumers and yield the best profits. It also advises the businesses about the upcoming shifts in the landscape which encourages them to plan accordingly.
Conclusion
Wholesaling is a great way to dive into the long-running game of business. It sure has its risks and problems, but everything can be smoothed out by careful planning, strategizing, and accumulation of experience.
From a bird’s eye view, wholesaling might feel like just buying in bulk and reselling. But as we take a deeper dive, we discover all the roles and responsibilities that lie on the shoulder of a wholesaler. Even one wrong move can bring loss.
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