Wholesale trading plays a crucial role in the market ecosystem as it serves as a link between manufacturers or producers and retailers or consumers. It involves buying goods in large quantities from producers and selling them in smaller quantities to retailers. Wholesale traders act as intermediaries, facilitating the movement of goods from the point of production to the point of consumption. Here are some key reasons why a wholesale trader is necessary:

1. Efficient Distribution: Wholesale traders help in the efficient distribution of goods by buying in bulk from manufacturers or producers. This allows producers to focus on their core activities of production, while wholesale traders take up the responsibility of distributing the goods to different retailers or selling them to other intermediaries.

2. Cost Advantage: Wholesale traders benefit from economies of scale as they purchase goods in large quantities. This enables them to negotiate lower prices with producers, which in turn allows them to offer competitive prices to retailers. By buying in bulk, wholesale traders can benefit from lower transportation costs, reduced packaging costs, and other economies that help in reducing overall costs.

3. Market Access: Wholesale traders play a crucial role in connecting producers with retailers. They have established networks and relationships with both parties, making it easier for producers to reach a wide range of retailers and for retailers to access a variety of products from different producers. Wholesale traders provide a platform for producers to showcase their products and for retailers to source goods efficiently.

4. Risk Management: Wholesale traders help in managing risks associated with fluctuations in demand and supply. They act as buffers by absorbing excess supply from producers during periods of low demand and providing goods to retailers during periods of high demand. This helps in stabilizing prices and ensuring a steady flow of goods in the market.

5. Market Information: Wholesale traders have access to valuable market information such as consumer preferences, trends, and competition. They can provide feedback to producers regarding the demand for specific products, enabling them to make informed decisions about production and inventory management. Similarly, they can also provide retailers with information about new products, pricing strategies, and market trends.

6. Credit Facilities: Wholesale traders often provide credit facilities to retailers, allowing them to purchase goods on credit and pay later. This helps retailers manage their cash flow and maintain sufficient inventory levels without the need for immediate payment. Wholesale traders extend credit based on their understanding of the retailer's creditworthiness and market conditions.

In summary, wholesale traders are necessary in the market as they facilitate efficient distribution, offer cost advantages, provide market access, manage risks, share market information, and offer credit facilities. Their role as intermediaries enhances the overall functioning of the market and contributes to its smooth operation.