Wholesaler Definition, Importance, Example, Types & Overview

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Definition: Wholesaler

Wholesaler is an entity which purchases large volumes of goods & products from manufacturers, stores in warehouses & sells in bulk to retailers or customers. Wholesaler is a part of the supply chain who is responsible to link the brand to the retailers and acts as an aggregator of various products that the brand has. Wholesalers don’t sell in small numbers like that of retailers, rather they sell in bulk quantities. Wholesalers have large depots where they stock the products from various brands. They also have the responsibility to look that the retailers don’t face stock outs and the customers are able to get uniform supply throughout the year.


Importance of Wholesalers

Wholesalers are responsible for connecting the various brands and the retailers. The B2B and B2C aspect of the supply chain can be touched through the wholesalers. They buy the product in bulk and accommodate the demand of retailers who sell it to customers in small quantities. The wholesalers have agents who keep track of the sale to retailers and the frequency of their sales is also monitored. All consumer goods and products start from the manufacturer. The manufacturer designs and manufactures the product most often. The manufacturer then sells the finished product to a wholesaler as wholesalers often have relationships that manufacturers don't have with retailers and distribution chains. In turn, the wholesaler sells the product to a retailer who can sell it to the customer. A retailer is a company that purchases and sells products to end users or customers from a manufacturer or wholesaler. In a sense, a retailer is an intermediary or intermediary used by customers to obtain products from producers.

Wholesalers

Role of Wholesalers in Business

The wholesalers along with the retailers act as intermediary between the manufacturers and the consumers. They facilitate the distribution efficiency for the retail system on a large scale as well as cater to the post purchase requirements. They not only organize the distribution system but also reduce the various distribution costs.

Wholesalers basically act as consumer touch points.They also provide additional assistance to the manufacturers in the following ways :

1. Wholesaler along with the retailers play a major role in fixing market prices for the items.

2. They are the major point of sales so they also provide valuable feedback on the products on the shelf.

3. Wholesalers also inform the manufacturers about the changing consumers’ tastes and choices.

4. They also help the manufacturers in the new product development process.

5. Wholesalers also reduce the inventory carrying cost due to large holdings for the retailers.


Types of Wholesalers

There are various types of wholesalers depending upon the kind of business that they do.

1. Merchant Wholesaler

2. Sales Branch & Offices

3. Miscellaneous Wholesaler

4. Agents & Brokers

5. Full Service Wholesaler

6. Limited Service Wholesaler

7. General Merchandize

1. Merchants are the most common types of wholesalers. Merchant wholesalers can be further divided into full service wholesalers and limited service wholesalers. Merchants keep non-competing product lines and may specialise in product line or customer type they wish to serve. They buy and keep the products in their warehouses.

2. Brokers & Agents do not own the products they keep in their inventory. They only warehouse products to be further sold and this transaction occurs through the brokers & agents between the producer and the retailer. They may also specialise in product line or customer type. Manufacturer’s agents are the most common kind of agent wholesaler. Brokers and Agents gets buyers and sellers together and help facilitate negotiation but themselves do not buy or own the products they store.

3. Manufacturer’s Sales Branches & Offices are wholesalers that are not 3rd party wholesalers but the wholesale warehouses owned by the manufacturing company itself.

These 3 types can further be divided as:

 

The above diagram shows the different types of wholesalers in business.

Example of Wholesalers

Large multi - national companies such as Walmart orchestrate product manufacturing, transport / importation, warehousing and product distribution directly to each retail store where customers ultimately shop. They actually control the entire supply chain, allowing them to dictate who makes their products right down to the display of the product. This provides the end customer with savings and the company with extra profit.

Hence, this concludes the definition of Wholesaler along with its overview.

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