Q.Explain the services offered by wholesalers to manufacturers.

Wholesalers offer manufacturers these key services:

• Facilitating large-scale production — pooling small retailer orders into bulk orders so producers enjoy economies of scale.
• Bearing risk — taking title to goods and carrying risks of price fall, theft, spoilage, fire.
• Financial assistance — paying cash for goods (and sometimes advancing money), freeing the manufacturer's capital.
• Expert advice — passing on market information on tastes, competition and demand.
• Help in marketing — handling distribution so the producer can concentrate on production. …

Wholesalers are a vital link between manufacturers and the market, and they perform several valuable services for producers:

• Facilitating large-scale production: Wholesalers collect the small orders of many retailers, pool them, and place bulk orders with manufacturers. This lets producers manufacture on a large scale and enjoy the economies of scale (lower cost per unit).

• Bearing risk: Wholesale merchants deal in goods in their own name, take delivery, and keep large lots in their warehouses. In doing so they carry risks such as a fall in prices, theft, pilferage, spoilage and fire, relieving the manufacturer of these risks to that extent.

• Financial assistance: Wholesalers usually make cash payment for the goods they buy, so manufacturers need not block their capital in unsold stock. Sometimes they even advance money to producers against bulk orders, easing the manufacturer's finances.

• Expert advice: Being in direct contact with retailers, wholesalers can advise manufacturers on customers' tastes and preferences, market conditions, competitors' activities and the features buyers prefer. They are an important source of market information.

• Help in the marketing function: Wholesalers handle the distribution of goods to many retailers (who in turn reach scattered customers). This frees manufacturers from much of the marketing work so they can concentrate on production. …