20 Wholesaling

Wholesalers are the institutions, which stand between the manufacturer and the retailer. The wholesaler buys goods in bulk from producers and sells them in small quantities to retailers. In doing so he helps the production process. If you had an intention to be a successful manufacturer, you would make high quality products at a reasonable price for selected markets. If you intended to be a wholesaler, you would learn how to serve the market.

Wholesaler economizes distribution. The most important function of a wholesaler is to conduct manufacturers and potential customers. For example, nine contacts and deliveries are necessary if three firms supply directly three retailers; whereas each producer deals only with a wholesaler, reducing the total number of transactions to six.

Wholesalers are used also for information and advice. Suggestions, which customers make to the retailer, are passed to the wholesaler who conveys them to the manufacturer. Thus the latter can improve his product.

The wholesaler keeps stocks. Shoppers like to obtain goods immediately. This requires stocks. Often however neither the producer nor the retailer has extensive storage facilities and responsibility falls on the wholesaler.

Moreover he arranges imports from abroad. Foreign manufacturers do not like to ship small parcels to individual retailers abroad. They prefer to deal with a wholesaler, an import merchant with established trade connections.

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21 Poverty

Poverty is a huge problem in the world today. Figures say that three billion people or half the world’s population live in poverty. Poverty exists in developing countries and in industrial nations. One in every ten Americans lives in poverty. However, poverty means different things to different people.

One measure of poverty is absolute poverty. People live in absolute poverty when they live on or below the poverty line. This is a level of income that is so low that people cannot afford the basic necessities to live, such as food, clothing and shelter. According to the World Bank, these are people who are living on two dollars a day. However, there are one billion people in the world who live on less than one dollar a day. The World Bank defines this as extreme poverty.

Few people in industrialized countries live in absolute poverty, but many live in relative poverty. This measure of poverty takes into account the differences that exist in a population between the rich and the poor. For example, some economists say that people who earn less than half the average income live in relative poverty. In Britain, this means 14 million people.

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