Explain how wholesalers add value for a producer

Question

What will be an ideal response?

Answer 1

Wholesalers add value by performing one or more of the following channel functions:
Selling and promoting: Wholesalers' sales forces help manufacturers reach many small customers at a low cost. The wholesaler has more contacts and is often more trusted by the buyer than the distant manufacturer.
Buying and assortment building: Wholesalers can select items and build assortments needed by their customers, thereby saving much work.
Bulk breaking: Wholesalers save their customers money by buying in carload lots and breaking bulk (breaking large lots into small quantities).
Warehousing: Wholesalers hold inventories, thereby reducing the inventory costs and risks of suppliers and customers.
Transportation: Wholesalers can provide quicker delivery to buyers because they are closer to buyers than are producers.
Financing: Wholesalers finance their customers by giving credit, and they finance their suppliers by ordering early and paying bills on time.
Risk bearing: Wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.
Market information: Wholesalers give information to suppliers and customers about competitors, new products, and price developments.
Management services and advice: Wholesalers often help retailers train their salesclerks, improve store layouts and displays, and set up accounting and inventory control systems.