A retailer purchases goods from a manufacturer and sells them to wholesalers.

A wholesaler is a primarily B2B company that purchases goods in bulk from manufacturers and sells them on to retailers. The retailers in turn then sell these goods to the consumer, building an additional profit margin into the retail price to cover both the wholesale cost of the goods and the various operating expenses that make up their Cost of Goods Sold (COGS). Although most wholesalers sell to other businesses (predominantly retailers), there are some who also sell their goods directly to consumers.

Because wholesalers have relatively tiny profit margins compared to retailers, they typically sell goods in very large volumes, with retailers purchasing hundreds or even thousands of units when they order. Margins may vary significantly depending on the type of products being sold, which is why some wholesalers specialise in a particular product or range.

According to Statista, the UK’s wholesale trade sector is expected to reach £854.9 billion in 2022, growing by 9% in 2021. In fact, wholesale trade organisations have reported the highest cumulative profits of any business sector in the UK.

Wholesaler examples

There are dozens of UK wholesalers operating at the time of writing. Some of these are physical ‘cash and carry’ wholesalers where retailers go to collect goods in bulk much like supermarket shoppers. Some are online wholesalers, delivering goods to retailers who purchase them over the internet. Some wholesalers sell exclusively to retailers, while others open their doors to the public.

Bookers is the largest and arguably most ubiquitous UK wholesaler, reporting a turnover of £5,927 million in 2020 and profits of £200 million. This is almost half the profits of the entire sector for that year according to The Grocer.

Other notable wholesalers operating in the UK include:

• Brakes

• Costco

• Connect Group

• Bidfood UK

• AF Blakemore & Son

• Menzies Distribution

• James Hall & Co

• Dhamecha Foods

• Matthew Clark Bibendum

• Kitwave Wholesale Group

Wholesalers in context

Now we know what a wholesale business does. But where does it fit in the context of a business supply chain?

For most consumer goods, the supply chain starts with suppliers of raw materials. These are sourced by manufacturers of finished goods who manufacture products to sell in bulk to wholesalers.

Retailers then purchase the goods from the wholesalers and then sell them on to the end-users.

While simple in principle, there are lots of opportunities for bottlenecks, delays and other inefficiencies, which is why many businesses use supply chain management solutions to ensure a smoother and more cost-effective supply chain.

Frequently asked questions about wholesalers

Can manufacturers also be wholesalers?

Sometimes manufacturers may sell their own products to retailers or even directly to the consumer. This is most commonly seen in the manufacture of high-value, low-volume goods or made-to-order products. However, selling goods requires a substantial investment in infrastructure as well as a greater degree of risk, which is why many manufacturers sell goods in large volumes to wholesalers.

What are the profit margins on wholesale products?

Wholesalers typically have less of a profit margin when selling to retailers. While the percentage range will vary depending on the product, wholesalers usually make between 15% and 30% in profit, while retailers may typically make between 20% and 50% profit on the wholesale price when selling goods to consumers.

What is wholesale banking?

Wholesale banking refers to banks that act as the equivalent of wholesalers to the financial services industry. They sell financial products and services to institutional or corporate clients like pension funds or property developers who deal in much larger sums than individual consumers. In this way, they are different to consumer-facing retail banks like Barclays, Santander or HSBC.

Alternatively, a wholesaler can be a type of salesperson employed by a company that creates and manages mutual funds. These people, also known as mutual fund representatives, sell these products to resellers who in turn make them available to individual investors.

• NCERT Solutions
• Class 11
• Business Studies
• internal trade

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Page No 79:

Question 1 (A.1):

Select the proper option from the options given below and rewrite the sentences.

A wholesaler invest ________ capital in the business.

(a) Small
(b) Large
(c) Less

Answer:

A wholesaler invests

capital in the business.

Explanation:
Wholesalers buy goods in large quantities from the manufacturers and sell them in smaller units to industrial units and/or retail traders. As wholesalers deal in large quantities and on a large scale, they invest large capital in the business.
The correct answer is B.

Page No 79:

Question 1 (A.2):

Select the proper option from the options given below and rewrite the sentences.

A retailer purchases goods from ________.

(a) Wholesaler  
(b) Producer
(c) Customer

Answer:

A retailer purchases goods from

.

Explanation:
A retailer purchases goods in large quantities from different manufacturers or wholesalers and
sells them to the final consumers in relatively smaller amounts. By doing so, he provides various services to both the parties.
The correct answer is A.

Page No 79:

Question 1 (A.3):

Select the proper option from the options given below and rewrite the sentences.

Retailer is the ________ link in the chain of distribution.

(a) First
(b) Last
(c) Second

Answer:

Retailer is the

link in the chain of distribution.

Explanation:
Retailer is the last link in the distribution channel, as he connects the wholesalers and consumers. A retailer purchases goods in large quantities from different manufacturers and/or wholesalers and sells them to the final consumers in relatively smaller amounts. The wholesaler, on the other hand, is the first link between the manufacturer and the retailers.
The correct answer is B.

Page No 79:

Question 1 (A.4):

Select the proper option from the options given below and rewrite the sentences.

Retailers supply market information to the ________ through wholesalers.

(a) Manufacturers
(b) Government
(c) Consumers

Answer:

Retailers supply market information to the

through wholesalers.

Explanation:
Retailers provide information to wholesalers in the form of the tastes and preferences of customers, prevailing market conditions and level of competition in the market. Wholesalers in turn pass on this information to manufacturers. This information helps manufacturers to cater to the changing needs of consumers.
The correct answer is A.

Page No 79:

Question 1 (A.5):

Select the proper option from the options given below and rewrite the sentences.

Prices charged by retailers are generally_______.

(a) Higher
(b) Lower
(c) Fixed

Answer:

Prices charged by retailers are generally

.

Explanation:
Retailers generally deal in low-priced goods, such as toiletries, vegetables and fruits that are of daily use to customers. Hence, the prices of their goods are generally lower.
The correct answer is B.

Page No 79:

Question 1 (A.6):

Select the proper option from the options given below and rewrite the sentences.

One price shop sales the goods at ________ prices.

(a) High
(b) Low
(c) Fixed

Answer:

One price shop sales goods at

prices.

Explanation:
One price shops generally deal in low-priced goods, such as stationery and toys that are of daily use to customers.  Hence, the prices of their goods are lower than those of other shops.
The correct option is B.

Page No 79:

Question 1 (A.7):

Select the proper option from the options given below and rewrite the sentences.

There is no salesman in the ________ shop.

(a) Department
(b) Supermarket
(c) Chain Store

Answer:

There is no salesman in the

shop.

Explanation:
Supermarket, is a large form of a shop, which offers a wide variety of goods such as food, grocery and household products. It is a self-service shop; therefore, it does not require any salesman.
The correct option is B.

Page No 79:

Question 1 (A.8):

Select the proper option from the options given below and rewrite the sentences.

Maximum shopping convenience is available to the consumers at ________ stores.

(a) Departmental
(b) Chain
(c) One price

Answer:

Maximum shopping convenience is available to the consumers at

stores.

Explanation:
Departmental stores offer a high degree of convenience to the customers by providing a large variety of goods at one place. Thus, the customers do not have to go from one shop to the other to complete their shopping.
The correct answer is A.

Page No 80:

Question 1 (B):

Match the correct Pairs.

Answer:

Explanations:
a)  A departmental store is a large establishment that deals in a wide variety of products, categorised into well-defined departments such as departments for toiletries, food and furniture. Such stores also provide specialised services. Hence, it can be concluded that these stores deal in specialised goods.

b) Market traders are small traders who have their shops open only on certain days of the week (i.e. market days). Generally, they only deal in a single type of good. Also, they do not have a fixed place where they sell their goods; rather, they roam from one place to another so as to cater to a large number of consumers.

c) General stores are the most common shops, as they deal in goods meant for satisfying the day-to-day needs of the customers, e.g. grocery items and toiletry products. They are generally found in residential areas or local markets and operate for long hours. These stores also provide a variety of consumer services, such as credit facilities and home delivery of products.

d) One price shops sell a wide variety of goods, such as stationery, toys and plastic goods, at a fixed price. The prices of goods sold in these shops are fixed in advance; hence, there is no scope of bargaining in one price shops.

e) Peddlers are the oldest form of retailers. They generally sell goods that are low in price and quality. These retailers do not have any shops for operation and move from place to place carrying goods on their heads, cycles, rickshaws or carts to reach out to their customers.

Page No 80:

Question 1 (C.1):

Write a word or phrase or a term which can substitute each one of the following statements.

A retail shop which operates through branches.

Answer:

A retail shop which operates through branches -

Explanation:
Chain stores are owned and operated by single organizations and specialise in selling a single line of products. They are generally spread across various locations and operate on a large scale by serving a large consumer base. For example, McDonalds has branches all over India, but all these branches are managed and controlled by its head office.

Page No 80:

Question 1 (C.2):

Write a word or phrase or a term which can substitute each one of the following statements.

A store where different shops are located under one roof.

Answer:

A store where different shops are located under one roof -

Explanation:
Departmental stores are large-sized retail establishments  that offer a wide variety of products under one roof. They comprise various departments for different types of products, such as medicines, clothing and food items. The general motto of such retail shops is to make everything available to its customers, i.e. from a pin to an elephant under one roof.

Page No 80:

Question 1 (C.3):

Write a word or phrase or a term which can substitute each one of the following statements.

A shop where all goods are available at same price.

Answer:

A shop where all goods are available at same price -

Explanation:
One price shops sell a wide variety of goods of daily usage at fixed or same price irrespective of the quantity and quality of the goods. In these shops, there is no scope of bargaining for consumers.

Page No 80:

Question 1 (C.4):

Write a word or phrase or a term which can substitute each one of the following statements.

A person who moves from place to place to sell goods.

Answer:

A person who moves from place to place to sell goods -

Explanation:
Itinerant traders are small retailers who do not have a fixed place of operation. In other words, they do not have a fixed shop to sell their products. They keep moving from place to place to sell their products. They are generally found at the street sides and the goods sold by them are often low-value products.

Page No 80:

Question 1 (C.5):

Write a word or phrase or a term which can substitute each one of the following statements.

A retailer who displays his goods on the road.

Answer:

A retailer who displays his goods on the road -

Explanation:
Street traders are mostly found at the street crossings or on the road sides where the flow of traffic is high. They mostly deal in goods like clothes, shoes, grocery items and bakery items and display their goods on the road to attract customers.

Page No 80:

Question 1 (C.6):

Write a word or phrase or a term which can substitute each one of the following statements.

A trader who purchases goods directly from the manufacturer or producer.

Answer:

A trader who purchases goods directly from the manufacturer or producer-

Explanation:
Wholesalers buy goods in large quantities from the manufacturers and sell them in smaller units to industrial units or retail traders. They represent the first stage of distribution and form a link between manufacturer and retailers. They are not in direct contact with the ultimate consumers.

Page No 80:

Question 1 (C.7):

Write a word or phrase or a term which can substitute each one of the following statements.

A trader who purchases goods from wholesalers.

Answer:

A trader who purchases goods from wholesalers-

Explanation:
A retailer purchases goods in large quantities from different wholesalers and sells them to the final consumers in relatively smaller amounts. By doing so, he provides various services to both the parties.

Page No 80:

Question 1 (C.8):

Write a word or phrase or a term which can substitute each one of the following statements.

The link in the chain of distribution.

Answer:

The link in the chain of distribution –

Explanation:
Intermediaries play an important role by acting as a link in the chain of distribution. They facilitate the transfer of goods from the place of production to the place where they are consumed. There are two middlemen between the producers and consumers – wholesalers and retailers.

Page No 80:

Question 1 (C.9):

Write a word or phrase or a term which can substitute each one of the following statements.

The middlemen between producer and retailer.

Answer:

The middleman between producer and retailer-

Explanation:
Wholesalers form a link between producers and retailers. They buy goods in large quantities from the producers and sell them in smaller units to  retail traders. They are not in direct contact with the ultimate consumers.

Page No 80:

Question 1 (C.10):

Write a word or phrase or a term which can substitute each one of the following statements.

The ultimate person in need of goods.

Answer:

The ultimate person in need of goods-

Explanation:
A consumer demands goods for the satisfaction of his/her wants. Manufacturers produce goods keeping in mind the tastes and preferences of these consumers. These goods are then served to consumers with the help of wholesalers and retailers.

Page No 80:

Question 2.1:

Distinguish between the following.

Itinerant Retailers and Fixed shop retailers.

Answer:

Page No 80:

Question 2.2:

Distinguish between the following.

Departmental Stores and Chain store.

Answer:

Page No 80:

Question 2.3:

Distinguish between the following.

Departmental Stores and Supermarket shop.

Answer:

Page No 80:

Question 2.4:

Distinguish between the following.

Chain Store and Supermarket shop.

Answer:

Page No 80:

Question 3:

Write short notes on the following.
1. Features of one price shop.
2. Speciality shops
3. Chain stores
4. Hawkers and Peddlers
5. Chamber of Commerce and Industry

Answer:

1. The following are the main features of one price shop.
i. Wide variety of goods: They provide a wide variety of goods to the customers.
ii. Low Price: The price charged by these shops is comparatively lower than that charged by other shops.
iii. Centrally located: Generally they are centrally located. Sometimes, they are temporarily set up in fairs and exhibitions.
iv. Cash sales: In these shops, sales are done on cash basis. As a result, there is no accumulation of debts.

2. Speciality shops specialise in a particular segment of the market. They deal only in a particular type of product from the selected product line such as men’s wear or college books. The goods offered at such stores are available at reasonable rates. They generally sell all the brands that deal in that product type. For instance, a shoe store may provide all the varieties of shoe Brands, such as Carlton London, Adidas, Bata and Catwalk.

3. Chain stores are owned and operated by single organizations that specialise in the selling of a single line of products. They are retail stores that are generally spread across various localities and operate on a large scale by serving a large consumer base. The various branches in different localities are owned and managed by a single head office which controls the working of the overall organization. Some of the chain stores operating in India are Pizza Hut, Dominos, etc.

4. Hawkers and peddlers are the oldest form of retailers. They sell low-priced and low-standard goods at the doorsteps of consumers such as vegetables, articles, utensils and pens. Such retailers often do not have any fixed shop for conducting their operations. In fact, they carry their goods on cycles, rickshaws or carts in order to reach out to a large base of consumers. The capital required by such retailers is very small and the amount of stock carried by them is also limited.

5. Chamber of Commerce and Industry acts as a guardian of trade, commerce and industry to protect and promote the common interests and goals. It facilitates the activities related to the inter-state movement of goods by registering vehicles, formulating transport policies and by constructing roads and highways. They also charge Octroi and local taxes on goods or from people entering into a state or municipal boundaries. These taxes form an important source of revenue for the local government. The chamber of commerce and industry also helps in the development of sound infrastructure.

Page No 80:

Question 4.1:

State with reasons whether the following statement are True or False.

Retailer sells goods on cash basis.

Answer:

Retailer sells goods on cash basis-

Explanation:
The above statement is correct. A retailer sells goods in small quantities and on cash basis. However, at times a retailer might offer goods on credit to regular customers.

Page No 80:

Question 4.2:

State with reasons whether the following statement are True or False.

Wholesaler deals in small quantity.

Answer:

Wholesaler deals in small quantity-

Explanation:
The above statement is incorrect. Wholesalers deal in large quantities and on a large scale, as they buy goods in large quantities from manufacturers and sell them in comparatively smaller units to industrial units or retail traders. Retailers, on the other hand, deal in small quantities.

Page No 81:

Question 4.3:

State with reasons whether the following statement are True or False.

A retailer has no direct contact with consumers.

Answer:

A retailer has no direct contact with consumers-

Explanation:
The above statement is incorrect. Retailers purchase goods in large quantities from different manufacturers or wholesalers and sell them to the final consumers in relatively smaller amounts. Retailers sell goods directly to the final consumers; thus, they are in direct contact with consumers.

Page No 81:

Question 4.4:

State with reasons whether the following statement are True or False.

Producer gets market information through wholesaler.

Answer:

Producer gets market information through wholesaler-

Explanation:
The above statement is correct. Wholesalers provide useful market information, such as the tastes and preferences of customers, the prevailing market conditions, level of competition in the market and type of goods demanded by consumers, to producers. This information helps producers to cater to the changing needs of consumers.

Page No 81:

Question 4.5:

State with reasons whether the following statement are True or False.

Wholesaler does not carry out any marketing functions.

Answer:

Wholesaler does not carry out any marketing functions-

Explanation:
The above statement is incorrect. In fact, wholesalers perform a variety of marketing functions, such as assembling, warehousing, transporting, grading, packing, advertising and financing.  This helps retailers save time and money.

Page No 81:

Question 4.6:

State with reasons whether the following statement are True or False.

Departmental store prefers central location.

Answer:

Departmental store prefers central location-

Explanation:
The above statement is correct. A departmental store prefers central location so that a large number of people can reach the store easily and that the store is able to attract a large number of customers belonging to different areas.

Page No 81:

Question 4.7:

State with reasons whether the following statement are True or False.

Supermarket shop offers home delivery facilities to customer.

Answer:

Supermarket shop offers home-delivery facility to customer-

Explanation:
The above statement is incorrect. Supermarket shops do not offer home-delivery facility to customers. In fact, they provide and sell food and grocery items on a self-service basis.

Page No 81:

Question 4.8:

State with reasons whether the following statement are True or False.

Customers can easily bargain in one price shop.

Answer:

Customer can easily bargain in one price shop-

Explanation:
The above statement is incorrect. A one-price shop sells goods at a fixed price. The prices of goods sold in these shops are fixed in advance; thus there is no scope of bargaining in a one-price shop.

Page No 81:

Question 5:

Write short answer of the following.
1. What is non-itinerant retailer?
2. What do you mean by street stall holders?
3. How is general store popular in retail market?
4. State the functions of wholesaler?
5. Write five functions of a retailer?

Answer:

1. The retailers who have fixed shops for their operations are known as non-itinerant traders. That is, they sell goods and services from fixed shops and do not move from place to place to serve their customers. For example, retailers functioning from fixed establishments in the local grocery market. Non-itinerant retailers may operate on a small scale basis as well as on a large scale basis. Under small scale shops, retailers deal in a variety of goods however, on a small scale via second hand shops or specialty shops. On the other hand, in large scale shops, the retailers invest huge capital and provide quality goods through shops such as departmental stores or chain stores.

2. Street stall holders are a type of itinerant retailers that operate at street crossings or on road-sides where the flow of traffic is high. They put up temporary stalls at crowded places such as bus stops, railway stations, etc., and mostly deal in goods such as clothes, shoes, grocery items and fast food items. They provide goods at lower rates and attract consumers by calling out or shouting about the goods.

3. General stores deal in goods meant for satisfying the day-to-day needs of the customers, e.g. grocery items, oils, stationary, plastic goods and toiletry products. They are generally found in residential areas or local markets and operate for long hours. These stores also provide a variety of consumer services, such as credit facilities and home delivery. Therefore, they are popular in the retail market.

4. The following are some of the functions of the wholesalers.
i. Facilitate large-scale production: Wholesalers purchase goods in bulk from manufacturers and sell them to retailers in small quantities for further resale. This bulk purchase made by wholesalers enables manufacturers to undertake production on a large scale.
ii. Providing storage facilities: When wholesalers purchase goods in bulk from manufacturers, they store these goods in their godowns or warehouses, reducing manufacturers’ burden of finding proper storage.
iii. Collecting market information: Wholesalers provide different kinds of information to manufacturers as well as retailers, such as information about the tastes and preferences of customers and prevailing market conditions. This, in turn, helps manufacturers produce goods according to the market needs and advice retailers about what to sell at what time.
iv. Sales promotion: Wholesalers also help retailers to increase their sale by undertaking advertisement and sale promotion activities.

5. The following are some of the functions of a retailer.
i. They provide information to customers: Retailers provide information about features, prices and availability of products in the market to customers.  This information helps customers decide which products to buy.
ii. They provide information to wholesalers: Retailers provide information, such as the tastes and preferences of customers, market conditions and level of competition in the market, to wholesalers. Wholesalers pass on this information to manufacturers.
iii. They store a wide variety of goods: Retailers store a wide variety of goods based on consumer tastes and preferences and, thus, allow customers to choose from the available range of products.
iv. They facilitate distribution and promotion of goods: Retailers facilitate the distribution of goods to consumers for final consumption. Moreover, since retailers are in direct touch with customers, they can promote the sale of goods through personal interaction.

Page No 81:

Question 6.1:

Long answer type questions.

What do you mean by itinerant retailers? Explain its features.

Answer:

Itinerant traders are retailers who do not have a fixed place of operation. That is, they do not have a shop from where they sell their products. They are also known as mobile traders, as they keep moving from place to place to sell their products. They are generally found on street sides and they shift their place of operation in search of more customers. They usually sell low-priced and non-standard goods.
Features of itinerant traders:
i.  Low price of goods: Itinerant traders generally deal in low-priced goods, such as toiletries, vegetables and fruits that are of daily use to customers.

ii. Personal attention to customers: Itinerant traders deal directly with consumers and are, therefore, able to give more attention to them.

iii. Easy availability at short notice: Itinerant traders move from place to place and provide goods at the customers’ doorsteps.

iv. Lower possibility of losses: Itinerant traders deal in consumer goods that are low-priced and meant for daily use. Thus, the probability of their incurring losses is minimised.

v. Wide range of goods: Itinerant retailers generally offer customers a wide variety of goods such as stationery, toiletry products, ice-creams and snacks.

Page No 81:

Question 6.2:

Long answer type questions.

What are the chain stores? Explain their system of selling goods?

Answer:

Chain stores refer to the stores that are owned and operated by single organizations that specialise in the selling of a single line of products. They are generally spread across different localities, so that it is convenient for customers to visit the stores. Some of the chain stores operating in India are Pizza Hut, Dominos, etc. The working of these chain stores follows a centralized pattern. That is, the head office generally practices centralised procurement of goods. The management and supervision of each of the chain stores is the responsibility of the branch manager of that store, who takes care of the daily operations. The stores are centrally controlled by the head office, which is responsible for policy-making and implementation. The prices of the goods offered by chain stores are fixed and low, and no bargaining is allowed. Although these stores provide a limited range of products but it works on a large scale and cover a wide geographical area for providing quality goods to its customers.

Page No 81:

Question 6.3:

Long answer type questions.

What do you mean by Departmental store? Explain the features.

Answer:

Departmental stores are fixed establishments that are large in size and deal in a wide variety of products. They generally work with the motto of making everything available to customers under one roof. They comprise various departments for different types of products, such as medicines, clothing and food items.
Features of department stores:
i. Central locations: They are generally located in central areas to attract a large number of customers.

ii. Defined hierarchy: Their management follows the same hierarchy that is generally followed in any joint stock company. That is, the top management consists of a board of directors with the managing director, general manager and department managers under it in that order.

iii. Absence of middlemen: They purchase goods directly from manufacturers and sell them to customers. Thus, they eliminate the role of middlemen.

iv. Centralised purchase with decentralised sales: In a departmental store, the purchases from manufacturers are handled by a single division that follows a centralised purchase policy. On the other hand, the sales are handled by the respective sections of the departmental store that follow a decentralised policy for sales.

v. Shopping convenience: The stores offer a high degree of convenience to the customers by making a large variety of goods available at one place. Thus, the customers do not have to go from one shop to the other to complete their shopping.

Page No 81:

Question 6.4:

Long answer type questions.

Explain the role of chamber of Commerce and Industry in internal trade?

Answer:

Chamber of Commerce and Industry acts as a guardian of trade, commerce and industry in order to protect and promote the common interests and goals.
Its role in internal trade is as follows:
i. Facilitates interstate movement of goods: It facilitates the activities related to inter-state movement of goods by registering vehicles, formulating transport policies and by constructing roads and highways.

ii.  Levies octroi and other local taxes: Octroi and local taxes are charged on goods or from people entering a state or municipal boundaries. These taxes form an important source of revenue for the local government. The chamber also regulates the imposition of such taxes so that they do not adversely affect local trade.

iii. Brings together the sales tax and VAT structure of different states: Sales tax and VAT are important sources of revenue for the state government. Chamber of Commerce and Industry ensures that these taxes are uniform across states for maintaining a balance in trade.

iv. Development of a sound infrastructure: The development of a sound infrastructure is necessary for the smooth flow of goods. Thus, the Chamber interacts with the government and convinces the government to invest in the development of infrastructure such as roads, highways, ports, railways and electricity.

v. Ensures uniform excise duty across states: The central and excise duty is one of the important sources of government revenue. In this regard, the Chamber ensures that the excise duty imposed by the central government is uniform across states.

Page No 81:

Question 6.5:

Long answer type questions.

What do you mean by wholesalers? Explain various services given by wholesalers.

Answer:

Wholesalers are the traders that buy and sell goods in bulk, usually for resale in local markets. They act as a link between the manufacturers and the retailers by purchasing and selling large quantity goods from the producers and then selling them to the retailers. They perform a wide variety of functions and provide various services to the manufacturers as well as the retailers.
The following are some of the services provided by wholesalers:

1. Facilitate large-scale production: Wholesalers purchase goods in bulk from manufacturers and sell them to retailers in small quantities for further resale. This bulk purchase made by wholesalers enables manufacturers to undertake production on a large scale.
2. Providing storage facilities and risk bearing: When wholesalers purchase and sell goods in bulk from manufacturers and retailers, respectively, they store these goods in their godowns or warehouses, reducing the retailers’ and manufacturers’ burden of finding proper storage. This in turn reduces the various kinds of risks related to the storage of goods.
3. Economies of Scale: Wholesalers provide manufacturers with a variety of warehousing facilities, such as collection, storage, marketing and distribution of goods. These services reduce the burden on manufacturers by creating time and place utility, thus enabling them to produce goods on a large scale and benefit from the economies of scale.
4. Collecting market information: Wholesalers provide different kinds of information to manufacturers as well as retailers, such as information about the tastes and preferences of customers and prevailing market conditions. This, in turn, helps manufacturers produce goods according to the market needs and advice retailers about what to sell at what time.
5. Sales promotion: Wholesalers also help retailers to increase their sale by undertaking advertisement and sale promotion activities.

Page No 81:

Question 6.6:

Long answer type questions.

What is the chain distribution? Explain the need of the middlemen in the market.

Answer:

Chain of distribution or channels of distribution refers to the individuals, institutions and agents who facilitate the process of distribution.
Middlemen play a very important role in the market. As the potential consumers of a product are spread over a larger geographical area, it becomes difficult for producers or manufacturers to directly contact customers for the sale of their products. Here, middlemen play an important role. They facilitate the transfer of goods from the place of production to the place where they are consumed.  For example, for a manufacturer of sugar in Punjab, it would be difficult to contact the customers in other parts of the country. To ease the process, it would sell its product to wholesalers who in turn would sell it to the retailers. The retailers then finally sell the product to the customers. In addition, the middlemen also reduce the efforts of the consumers by offering various goods and services at a convenient single location. For example, at a retail store a customer can get a wide variety of goods. Besides this, middlemen perform the function of setting a deal that can satisfy producers and consumers. They negotiate price, quality, quantity, etc., for efficient transfer of ownership to satisfy the needs of both parties.Thus, channels of distribution or middlemen play an eminent role as they facilitate the exchange or transfer of goods and services from the producer to the consumer.

Page No 81:

Question 6.7:

Long answer type questions.

What do you mean by retailers? Explain the features of retailers.

Answer:

A retailer is a person who purchases goods in large quantities from different manufacturers or wholesalers and sells them to the final consumers in relatively smaller amounts. They are said to be the last middleman in the chain or channel of distribution as they directly provide goods to the ultimate consumers.
The following are some of the characteristics of retailers.

1.  They represent the final stage of distribution and act as a link between the manufacturer and the consumer.
2. They generally deal in more than one product, i.e. their range of goods varies from consumer durable goods to non-durable goods.
3. They generally operate in local markets that are located in residential areas.
4. The capital invested by them is relatively small compared to that invested by wholesalers.

They offer after-sales and customer-care services, provide the facility to buy goods on credit and display a wide variety of goods for selection.

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Question 6.8:

Long answer type questions.

Explain the features of wholesalers.

Answer:

A wholesaler is a person who buys goods in large quantities from the manufacturers and sells them in smaller units to industrial units or retail traders. They act as a link between manufacturer and retailers and are not in direct contact with the ultimate consumers.
The following are the main feature of wholesalers.
i. They represent the first stage of distribution and form a link between manufacturers and retailers.
ii. They deal in a single line of products and usually take the title of goods from the manufacturers and sell them later in their own name.
iii. Wholesalers trade in bulk quantities as they buy and sell goods in large quantities.
iv. They provide various services to manufacturers and retailers such as storage facility, providing market information, risk bearing and regular supply of goods.
v. Wholesalers perform a variety of marketing functions, such as advertising, warehousing, financing, etc, thereby helping retailers to save time and money.
vi. Wholesalers also help in maintaining and stabilizing the market prices by balancing the demand and supply of goods.

View NCERT Solutions for all chapters of Class 13

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