Why do retailers prefer to deal with wholesalers rather than directly with manufacturers?
What will be an ideal response?
In general, retailers prefer to deal with wholesalers rather than directly with manufacturers (and vice versa) as wholesalers are better at performing the following functions:
Selling and promoting: Wholesalers' sales forces help manufacturers reach many small business customers at a relatively low cost. They have more contacts, and buyers often trust them more than they trust a distant manufacturer.
Buying and assortment building: Wholesalers are able to select items and build the assortments their customers need, saving them considerable work.
Bulk breaking: Wholesalers achieve savings for their customers by buying large carload lots and breaking the bulk into smaller units.
Warehousing: Wholesalers hold inventories, thereby reducing inventory costs and risks to suppliers and customers.
Transportation: Wholesalers can often provide quicker delivery to buyers because they are closer to the buyers.
Financing: Wholesalers finance customers by granting credit, and finance suppliers by ordering early and paying bills on time.
Risk bearing: Wholesalers absorb some risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.
Market information: Wholesalers supply information to suppliers and customers regarding competitors' activities, new products, price developments, and so on.
Management services and counseling: Wholesalers often help retailers improve their operations
by training sales clerks, helping with store layouts and displays, and setting up accounting
and inventory-control systems. They may help industrial customers by offering training and technical services.
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