Wholesale trade refers to activity that involves buying of goods from producers in bulky and selling them to other traders e.g. retailers, industrial users e.t.c.in quantities they can afford
The features of wholesale trade include:-
- Linking Producers to Retailers: Wholesale trade acts as a bridge between producers or manufacturers and retailers. It facilitates the distribution of goods from the producers to the retailers, ensuring a smooth supply chain.
- Bulk Buying: Wholesale trade involves purchasing goods from producers or manufacturers in large quantities. This bulk buying allows wholesalers to take advantage of economies of scale, negotiate better prices, and obtain discounts from suppliers.
- Breaking Bulk: Wholesalers break the bulk of goods purchased from producers into smaller quantities suitable for resale to retailers. They divide large shipments into smaller units to meet the needs of retailers and make it easier for them to manage inventory.
- Large Capital Investment: Wholesale trade requires a significant amount of capital to stock a wide variety of goods. Wholesalers invest in purchasing and storing large quantities of goods to cater to the demands of retailers and maintain a diverse product range.
- Warehousing: Wholesalers typically operate warehousing facilities to store the goods they buy in bulk. These warehouses serve as storage and distribution centers, allowing wholesalers to manage inventory efficiently and ensure a steady supply of goods to retailers.
- Sales to Other Traders: The primary customers of wholesalers are other traders, especially retailers. Wholesalers sell products in large quantities to retailers who then sell them to end consumers. This enables retailers to access a wide range of goods from different suppliers through a single wholesaler.
- Urban Center Focus: Wholesale trade is predominantly carried out in urban centers due to the larger market size and concentration of retailers. Urban areas provide a centralized location for wholesalers to connect with retailers and facilitate efficient distribution.
- Role of Wholesalers: Wholesale trade is primarily conducted by wholesalers, who are specialized traders responsible for purchasing, storing, and distributing goods in bulk. Wholesalers play a crucial role in the supply chain by ensuring the availability of goods to retailers and contributing to the overall efficiency of the distribution process.
These features collectively define the nature and operations of wholesale trade, highlighting its role in connecting producers and retailers, facilitating bulk transactions, and supporting the efficient distribution of goods in the market.