Specific kinds of wholesalers

There are two specific kinds of wholesalers who deserve mention in this discussion: (1) petroleum bulk stations, and (2) assemblers of farm products.
Petroleum bulk stations are wholesalers who distribute petroleum products. These products require special handling and special installations. The services performed, however, are similar to those of other wholesalers.
Assemblers of farm products pick up the products of these farms, assemble them, grade them, and ship them to wholesale markets. For fresh fruits and vegetables, this is a costly operation because of the spoilage and special handling necessary.
In spite of gloomy forebodings which used to be common a few years ago, the wholesaler has managed to hold his own because of the very real services he renders. But the wholesaler today, as compared with one hundred years ago, is a much less important member of the business fraternity. One hundred years ago, there were no such things as chain stores, department stores, supermarkets, discount houses, and large retailers found now in every community in the land.
For a long time, many producers have used various means to bypass the wholesaler. As retailers grew larger, they, too, began buying direct. When groups of retail merchants started forming cooperative wholesale distributing houses, remaining wholesalers adopted modern cost-cutting methods in order to compete successfully although, in many instances, they were to serve only the smaller retailers.
The reader should keep in mind that the function of wholesaling is vital to any widespread economy. By modernizing establishments, merchant wholesalers have been able to hold their own and, in some instances, to make spectacular comebacks. By adopting newer techniques of the integrated distributors, wholesalers have been able to regain some of the ground lost to manufacturers' branches, sales offices and agent middlemen. By providing rapid, low-cost and efficient service to the retailers who depend upon them, such wholesalers have adapted themselves to changing conditions.
We are not implying that marginal and inefficient wholesalers will be able to survive. They are likely to be driven out of business in many lines in the years ahead. Small wholesalers, with annual sales of one-half million dollars and less, appear to face serious trouble ahead. Some of these wholesale merchants show operating costs as high as 30 per cent of sales. The modern consumer is in no mood to pay for such high distribution costs. The large, full-service merchant wholesaler can operate on 6 per cent or less, while the average for all merchant wholesalers is 13.2 per cent.
The push is on for lowering the cost of distribution, and a wholesaler who cannot meet the demands of retailers and their customers is likely to drop out of the competitive race in the next decade. Obviously, larger operators have a decided advantage in effecting economies which will permit them to remain in business.
It is natural, therefore, to expect that wholesale establishments, like their counterparts in retail marketing, will grow bigger and will reduce the cost of operations through more volume, more efficient merchandise handling, and the use of electronic data processing for inventory controls, order processing, and similar operations which, in the past, have been done by hand labor.
It should be kept in mind that the function of wholesaling will be maintained as long as there is a small number of producers, concentrated in a few localities, and a very large number of consumers or customers, spread out over large areas. The function cannot be eliminated, although it can be integrated with other functions: manufacturing on the one hand, or retailing on the other.