The most important function wholesalers perform is moving products from manufacturers to retailers (i.e., warehousing and transportation). Distributing products can be quite costly for producers. Wholesalers can spread the costs of distribution over various products. This is why producers often rely on wholesalers for several distribution tasks. Wholesalers help producers and retailers to keep the costs low.

Wholesalers function in many ways.

  • Distribution channel relationships: Wholesalers develop and maintain long-term relationships with other channel members.
  • Warehousing: Wholesalers receive and store products before they are shipped to other members in the supply chain.
  • Shipping: Wholesalers provide product transportation.
  • Promotion: Wholesalers provide advertising and publicity.
  • Inventory control: Wholesalers process orders and record transactions.
  • Marketing trends: Wholesalers track data on sales for the purpose of analyzing trends.
  • Product responsibilities: Wholesalers assume some risks related to theft, product obsolescence, and inventories.
  • Financial responsibilities: Wholesalers extend credit, make investments, and forecast cash flow.
  • Market research and knowledge: Wholesalers identify potential markets to other channel members and conduct research studies.