Quick answer: Arguments for eliminating wholesalers: they raise prices, producers can sell direct online, large retailers buy direct, better transport reduces the need for them, they may hoard, they rarely help new producers and they reduce producer control. Arguments for keeping them: they reach millions of small shops, finance the chain, store and break bulk, absorb risk, share market information, reduce transactions, and their costs do not vanish when they are removed.
| Side | Key points |
|---|---|
| Against | Higher prices, direct selling, hoarding |
| For | Reach, credit, break bulk, risk |
| Trend | Digital B2B wholesale (Udaan, Jumbotail) |
| Verdict | Transformation, not elimination |
“Cut out the middleman” sounds like an obvious way to lower prices. Yet Hindustan Unilever, ITC and Nestlé still sell most of their products in India through distributors and wholesalers, and B2B apps such as Udaan and Jumbotail have grown by doing a wholesaler’s job digitally. The middleman’s work does not disappear when you remove him; someone else has to do it.
Here are the main arguments for eliminating wholesalers and the arguments for keeping them. For what they actually do, see the functions of wholesalers.
Arguments for Eliminating Wholesalers
1. They Add to the Final Price
Each layer takes a margin, so a longer chain means a higher retail price.
2. Producers Can Now Sell Direct
E-commerce, company websites and D2C brands let manufacturers reach buyers without intermediaries.
3. Large Retailers Buy Direct
Chains like DMart and Reliance Retail buy straight from manufacturers in bulk.
4. Better Transport and Communication
Good roads, couriers and phones reduce the need for local stockists.
5. Hoarding and Black Marketing
In times of shortage, some wholesalers hold back stock to push prices up.
6. Little Help for New Producers
Wholesalers often prefer established brands with steady demand.
7. Loss of Control
Producers cannot easily control how their products are priced, stored or displayed.
Arguments for Keeping Wholesalers
8. They Reach Millions of Small Shops
India has well over a crore kirana and small retail outlets. No manufacturer can serve them all directly at low cost.
9. They Finance the Chain
Wholesalers pay producers promptly and give retailers credit, carrying working capital that would otherwise fall on both.
10. They Store and Break Bulk
They buy in truckloads and sell in cartons or single units, matching factory output to shop-sized orders.
11. They Absorb Risk
Price falls, damage and slow-moving stock are partly their problem, not the producer’s.
12. They Share Market Information
They tell producers what is selling and what retailers need.
13. They Cut the Number of Transactions
One distributor serving 300 shops replaces 300 separate producer-shop relationships.
14. Eliminating Them Moves Cost, Not Removes It
Whoever replaces the wholesaler, a brand’s own sales team or a B2B app, must still store, deliver and give credit.
The Verdict
| Situation | Wholesaler useful? |
|---|---|
| FMCG for kirana stores | Yes, essential |
| Large chain retailers | Often bypassed |
| D2C online brands | Usually not needed |
| Industrial goods to few buyers | Often direct |
| Rural markets | Yes, often with sub-stockists |
The real trend is not elimination but transformation: wholesalers are going digital and becoming leaner. Related: services of wholesalers.
