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Wholesaling is a part of marketing system. It provides channels of
distribution which help to bring goods to the market. Generally, indi¬rect channels
are used to market manufactured consumer goods. It could be from the
manufacturer to the wholesaler, from the retailer to the consumer or through
more complicated channels. A direct channel moves goods from the manufacturer
or producer to the consumer.
Wholesaling is often a field of small business, but there is a growing
chain movement in the western countries. About a quarter of wholesaling units
accounts for the one-third of total sales.
Two-third
of the wholesaling middlemen are merchant wholesalers who take title to the
goods they deal in. There are also agent middle¬men who negotiate purchases or
sales or both. They don't take title to the goods they deal in. Sometimes they
take possession though. These agents don't earn salaries. They receive
commissions. This is a percentage of the value of the goods they sell.
Wholesalers simplify the process of
distribution. For example, the average supermarket stocks 5.000 items in
groceries alone, a retail druggist can have more than 6.000 items. As a
wholesaler handles a large assortment of items from numerous manufacturers he
reduces the problem of both manufacturer and retailer. The store keeper does
not have to deal directly with thousands of different people. He usually has a
well-stocked store and deals with only a few wholesalers.