Of what importance is a wholesaler in the chain of distribution?

Analyze the question: It asks about the importance (positive function) of a wholesaler in the chain of distribution, which is the path goods take from producer to wholesaler, to retailer, to consumer.

Explain the concept: Wholesalers buy goods in large quantities from producers or manufacturers. They then sell in smaller quantities to retailers. Their main functions include:

• Bulk breaking: buying in large lots and dividing them into smaller quantities that retailers can afford and handle
• Warehousing and storage
• Granting credit to retailers
• Providing market information to producers and retailers
• Transporting goods and taking on risk

Go through the options:

• A. Creation of artificial scarcity: This is a harmful practice, not an importance.
• B. Bulk breaking: This is the core function of a wholesaler. They buy in bulk from producers and sell in smaller units to retailers.
• C. Formation of trade unionism: This has nothing to do with distribution functions.
• D. Hoarding of goods: This is a negative, unethical practice, not a function.
• E. Making prompt payment to producers: This can happen, but it is not a defining function of wholesaling in the distribution chain.

Answer: The correct option is B, bulk breaking.

Tip: In distribution questions, link each middleman to their signature function:

• Wholesaler → bulk breaking
• Retailer → selling in small units to final consumers

Also, when a question asks for "importance" or "function", eliminate options that describe malpractices like hoarding or artificial scarcity.