Internal Trade — Wholesale Trade

Wholesale trade is the first of the two branches of internal trade. It refers to the business of buying goods in large quantities, typically directly from producers or manufacturers, and selling them in comparatively smaller — but still fairly large — quantities to retailers, industrial users, or other business buyers, rather than directly to the final individual consumer. The person or firm carrying on this activity is called a wholesaler.

A wholesaler is best understood as the crucial middle link connecting a manufacturer, who wants to produce and dispatch in bulk, to a large number of small retailers scattered across a wide area, each of whom wants only a modest, manageable quantity of stock at any one time. Without the wholesaler, either the manufacturer would have to deal individually with thousands of small retail shops — an administratively impossible task — or every retailer would have to travel to the factory itself to collect stock, which would be equally impractical. The wholesaler solves this problem by buying centrally in bulk and then redistributing in smaller lots closer to where retailers are located.

Several features distinguish wholesale trade from other forms of trade. First, wholesalers deal in large-scale buying and selling — the quantities involved in a single transaction are far larger than what an ordinary household would ever purchase at once. Second, a wholesaler usually specialises in a limited range or a single line of goods (for example, only textiles, or only stationery, or only pulses and grains) rather than the wide assortment of unrelated items a retail shop typically stocks; this specialisation lets the wholesaler build deep expertise and strong supplier relationships in that one line. Third, the wholesaler's place of business is often located in a wholesale market or a commercially central area, rather than in a residential neighbourhood, since its customers are other businesses rather than passing individual shoppers. Fourth, and most importantly, wholesalers act as the link between producers and retailers, performing several valuable services for both sides at once. …