Functions of the Wholesaler

len Alfred Ajibola - Wed, 12th February, 2020 @ 3:56 PM

Topics in Economics

Types of capital market: Primary market and secondary market Capital market explained with its functions Basic tools for economic analysis: Graphs explained with its characteristics and importance Basic tools for economic analysis: Tables explained with its characteristics and importance Factors affecting population in economics Advantages of Inflation Disadvantages of Inflation Concept of Inflation in Economics Scheme of work for Economics, SS1, First Term Scheme of work for Economics, SS1, Second Term Scheme of Work for Economics, SS1, Third Term Functions of the Wholesaler Advantages and Disadvantages of the Wholesaler Wholesale Market: Who is a Wholesaler? Characteristics of the Wholesaler Retail Market: Who is a Retailer and Examples of Retailers Market: Types of Market What is a Market in Economics? Elasticity of supply explained with its types Supply Elasticity: Elasticity of Supply explained

Academic Questions in Economics

Please click here to see all Questions and Answers

_____ is defined as a gradual and sustained rise in price level of goods and services in relation to their availability.

  • A. Basis Point Rate

  • B. Hike Rate

  • C. Elastic Supply

  • D. Elasticity of Price

  • E. Price Inflation

  • F. Aggregate Supply

The wholesalers can bring about an economy of scale.

  • A. True

  • B. False

Which of the following statement isn't a characteristics of the wholesaler?

  • A. They may have to operate in specific areas or regions accorded them by the producer

  • B. They are often popular in the line of goods they supply

  • C. They are not risk bearers

  • D. They have good storage facilities

  • E. They often pay for goods supplied by the manufacturers in advance

  • F. They usually have business agents or brokers

The wholesalers act as the middlemen in supply chain.

  • A. True

  • B. False

Large retailers who buy directly from manufacturers are termed as _____.

  • A. Wholesale Retailers

  • B. Certified Retailers

  • C. Codified Retailers

  • D. Commodity Retailers

  • E. Manufacturers Retailer

  • F. Conspicuous Retailers

_____ is a market whereby the sellers buy goods in lesser quantities from the wholesalers and sells in bits to the final consumers.

  • A. Commodity

  • B. Retail

  • C. Wholesale

  • D. Labour

  • E. Common

  • F. General

Which of the following is not a financial market?

  • A. Money Market

  • B. Bond Market

  • C. Foreign Exchange Market

  • D. Virtual Market

  • E. Capital Market

  • F. Stock Exchange Market

A _____ market provides a platform whereby job seekers link up with employers in an attempt to be hired.

  • A. Wholesale market

  • B. Bond market

  • C. Physical market

  • D. Virtual market

  • E. Factor Market

  • F. Labor Market

Functions of the Wholesaler:

The wholesalers are traders that act as a link between the producers or manufacturers and the retailers. For this reason, they may also be referred to as the intermediary or middleman.

You can read on the advantages and disadvantages of the wholesaler here.

By definition, the wholesaler is a trader that buys goods in large quantities from the producers (or manufacturers) and sells lesser quantities to the retailers.

Please read more on the Wholesaler here.

The wholesaler performs the following functions:

1. Storage Function

The wholesaler will typically own or rent a storage facility to preserve the goods which he/she buys (in large quantities) from the manufacturers.

The use of storage facility is crucial to the wholesaler's business because he/she may end up selling the goods purchased from the producer after some period of time. To this end, the wholesaler will need a storage facility to keep such goods intact.

You can read on the problems of agriculture in Nigeria here.

The term wharehouse describes the place where the wholesalers keep large quantities of goods.

2. Distributive Function

The wholesalers buys goods from the manufacturers and distributes them to other locations. Through this process, they expand the market for such product.

Please read on the concept of market in economics here.

As an instance, one of the appliances in your home (or even your phone) may not be manufactured in your country or state. It is in fact the distributive function of the wholesaler that gets those products into your country or state.

Please read more on foreign trade here.

3. Transportation Function

It is the duty of the wholesalers to provide transport facilities in order to move goods from the producers' factory to various warehouses (owned or rented by the wholesaler) and from these warehouses to the retailers location.

The goods are transported in bulk quantities by the wholesaler in order to minimize the cost of transport.

Please read on the advantages and disadvantages of road transport here.

Note: In most cases, the wholesaler will own the transport facilities but sometimes, they may be rented.

4. Middleman

The wholesaler always function as a middleman between the producers and the retailers. He buys goods in large quantities from the producers and sells in smaller quantities to the retailers.

Please read on the characteristics of wholesalers here.

5. Provides Useful Information

The wholesaler provides useful and valuable information to the producers and retailers.

  • To the producers, they provide details on the acceptance of their products and ways to bring about its improvement.
  • To the retailers, they provide information relating to the advantages and benefits of the product's usage. They also give clues to retailers on various reasons why the consumers should buy their product.

Please read on outbound marketing here.

6. Specialization Function

The wholesalers are usually associated with the bulk purchase of a specific type of a product from a manufacturer (or a few related products from one or more manufacturers).

The wholesalers are very knowledgeable on the products they sell and as such are able to deal with issues concerning such products.

Please read on the concept of business studies here.

7. Financing Function

The wholesalers are likely to pay in advance for the manufacturer's product since they buy in large quantities.

Note: Since the wholesaler make payments in advance, this will aid the producers to better understand the level of demand for their products.

Please read on demand and law of demand here.

Conversely, the wholesalers will accept to sell their products on credit to the retailers. They do this in order to promote the product and its sales. Retailers who receive products on credit will make payments after sales have been made.

8. Price Stability Function

The wholesalers are known to sell goods at a stable price in accordance with what they had purchased from the manufacturers. They are able to achieve this since they buy goods in large quantities from the manufacturers, and sell at similar prices to the retailers.

Please read on supply elasticity here.

If the cost of production increases from the perspective of the manufacturers, the wholesalers will buy at a higher price and sell at an increased but stable price to the retailers. However, the various retailers will sell at a similar price to the final consumers since they all bought that specific product (goods) from the wholesaler. As an instance, a sachet milk (from a specific manufacturer) will sell at similar prices at various retail stores.

9. Risk Bearer and Shock Absorbers

Although the producers, wholesalers and retailers are also risk bearers with regards to the sale of a product, the wholesalers will in addition act as a shock absorber especially in the movement and distribution of goods.

Also, due to unforeseen circumstances, the demand of goods may change (negatively) and the wholesalers will have to bear this probable risk.

Note: The wholesaler takes upon himself or herself the risk of damage during the process of moving goods (in transit) and their storage.

Please read on the characteristics of business here.

Another instance of risk shouldered by the wholesalers will come in the form of bad debts, especially by the retailers who got goods on credits and are unable to pay.

Similarly, the wholesalers may get substandard goods from the producers after making payments in advance. That's also a form of bad debt.

You can read on the disadvantages of money here.

10. Packaging and Branding

Certain wholesalers will need to assemble and brand the goods purchased from the manufacturers.

  • For instance, a company may buy different parts of a car from another country; and may further the car's production by reassembling, branding and packaging them to the taste and standard of the consumers.
    Please read on the concept of marketing here.

The wholesalers may also put their trademark, logo or brand name after branding and packaging had been done.

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Amazing facts in Economics

Notable points in Economics

A unitary elasticity of supply is seen when a change in price brings about a corresponding and proportional change in the quantity of goods or services supplied.

The graph below shows a unit elasticity of supply:
Unit Elastic Supply Curve - Len Academy

Below is an instance of a unitary elasticity of supply:

  • If a 100% increase in the price of wheat translates into a 100% increase in the production and supply of wheat, then the supply elasticity is said to be unitary elastic and its value is equal to 1.

Unitary elasticity is always equal to 1, that is: Es = 1

The supply curve runs diagonally and will pass through the center.

Supply elasticity is defined as the rate at which an increase in price of goods translates into its increased production and availability in the market. Supply elasticity is also termed as price elasticity of supply.

Consider the statements below:

  • If a 100% increase in the price of rice translates into a 100% increase in the production and supply of rice, the supply elasticity is said to be unitary elastic and its value is equal to 1.

  • If a 100% increase in the price of rice translates into a 50% increase in the production and supply (quantity) of rice, the supply elasticity is said to be inelastic and its value will be greater than zero and less than 1. In this case, the exact value is 0.5: (value of change in the quantity of rice divided by value of change in price of rice = 50/100 = 0.5).

  • Please read on supply elasticity here

The individual demand schedule is a table that shows the demand of a commodity that an individual (consumer) purchased at various prices, and at a particular time.

The table below shows an individual demand schedule:

Price in Naira (of a tuber of yam)

Quantity demanded (per week)











The market demand schedule is also referred to as an aggregate demand schedule, total demand schedule or composite demand schedule.

This is a table that shows the different commodities purchased by all the consumers or customers in the market.

The market demand schedule is the summation of the individual demand schedules, showing the demand of different customers for a commodity at a particular price. It is shown in the table below:

Unit price of commodity (Naira)

Quantity demanded by consumer A (QA)

Quantity demanded by consumer A (QB)

Market demand (QA +  QB)






















From the above table, notice that when the unit price of the commodity was 50 Naira, consumer A demanded 20 quantities while consumer B demanded 15 quantities.

Please read more on demand schedule here.

Below are definitions of demand from the perspective of some notable professors:

The demand for goods is a schedule of the amounts that buyers would be willing to purchase at all possible prices at any one instant of a time.

Professor Mayers

Demand is the various quantities of goods that would be purchased per time period at different prices in a given market.

Professor Hibdon

The demand for anything, at a given price is the amount of it which will be bought per unit of time at the price.

Professor Benham

Generally, demand is defined as the willingness of a person, buyer or consumer to buy a specific quantity of goods or service at a given price and time.

From the above definitions, we can infer that the definition of demand is referenced to three major factors. These are:

  1. Quantity of Goods Demanded

  2. Price

  3. Time

Please read more on the concept of demand here.