Why we have wholesale merchants

Wholesalers exist because there are close to 1,800,000 retail estab¬lishments, the majority of which have neither the capital nor storage facilities to buy direct from the manufacturer.
As we have seen, there are 38,000 manufacturers whose products eventually reach the consumer through 1,800,000 retail establishments. It is the job of the 308,- 000 wholesalers to see that the 1,800,000 retailers are stocked with merchandise to accommodate the millions of consumers.
In round numbers, 1,800,000 retail stores serve the needs of 200,000,000 consumers, or an average of 111 consumers per retail store. The enormous volume of re tail sales, which in a recent year ran to something like $304 billion, would be impossible to attain on a direct factory-to-consumer basis. Nor could a relatively small number (38,000) of manufacturers of consumer goods attempt to sell direct to 1,800,000 retail merchants, many of whom are small. That is why we have merchant wholesalers.
The primary function of the wholesale merchant is to assemble merchandise from many sources, warehouse it, regroup the goods for convenient buying by retailers, and then deliver the goods to retail customers. Traditionally, the wholesale merchant has extended credit to his retail customers. This practice is referred to in the trade as carrying his customers, sometimes for a period of many months.
Naturally, it is the small merchant who benefits from this practice because it enables him to obtain goods on time. Often, he is able to sell the goods to consumers before he has to pay his bill to the wholesaler. For the small merchant with limited capital, this is often the only means of staying in business.
Despite the growth of the so-called cash-and-carry wholesaler, who neither extends credit nor delivers merchandise-the retailer calls for his own purchases and pays cash-most wholesale merchants do extend credit to retail customers.
Most modern wholesale merchants provide information and advisory service to retailers, and they are often in a position to provide local market information to manufacturers as well. And since wholesale merchants send their own salesmen into the retail establishments of their customers, they also supply merchandising advice and other selling aids to retailers. Their most important service, of course, is that of making it possible for the manufacturer to sell to thousands of smaller retailers who cannot be sold direct from the factory because of their remote location, their small buying power, or their lack of storage space to purchase in large enough quantities to make such direct shipments economically feasible.