General Merchandise Wholesaler - Meaning, Importance & Example
Published by MBA Skool Team, Last Updated: May 17, 2020
What is General Merchandise Wholesaler?
General merchandise wholesalers carry an extensive variety of non-perishable products like electrical supplies, hardware, plumbing supplies, furniture, cosmetics, medicines, and automobile equipment. With their broad line of convenience and shopping goods, general merchandise wholesalers serve pharmacies, electric appliance shops, hardware stores, and small department stores. General merchandise wholesalers buy a large volume of products from one or more suppliers and add value to those products by reselling in small quantities to distributors, resellers and retailers.
These wholesalers usually have multiple suppliers affixing diversity to their product range and choices for their customers. General merchandise wholesalers resell their products in several different categories and industries.
The products generally have a broad range with a large variety ranging from food products to household and electrical appliances, equipment, cosmetics, etc. As the products are generally non-perishable, the wholesaler can buy products in huge quantity taking advantage of bulk discounts which result in greater profits. Buying in bulk quantities also decrease the ordering costs, shipping, and transportation costs resulting due to recurring transportation.
A large volume of products decreases the risk of stock out the situation and unanticipated increase in demand. But high inventory can result in increased inventory costs like holding cost and the risk of products becoming damaged or obsolete. General merchandise wholesalers have a business relationship with the distributors of a variety of industries and firms due to their accord with a large variety of products. The profits are usually high as products are sold in smaller quantities to the retailers.
Difference between General Merchandise Wholesalers and Distributors
A general merchandise wholesaler assumes no role other than satisfying retailer demands and only fulfills orders from retailers and has businesses with a lot of distributors dealing with different products. On the other hand, a distributor along with executing received orders acts as a sales representative for the manufacturer. Whereas, a wholesaler's principal source of revenue is discount charged on products by selling to retailers the products bought in bulk at lower prices from the distributors, the source of revenue for distributors is generally service fees which are offered in form of a fixed percentage of the net sales.
The key customers of the wholesalers are retail houses, unlike distributors who work as salaried employees of the manufacturers. Distributors supply the retailers and the wholesalers as well as look for various opportunities in the market and have a wider extent of operations than the wholesalers who simply rely on retailers' orders.
Examples of General Merchandise Wholesalers
In the US, Four Seasons General Merchandise, Dollar Item, and Rock Bottom Deals are some of the general merchandise wholesalers.
In India, some of the famous general merchandise wholesalers are India Mart, MilMila, Shopclues and WYDR who wholesale a variety of products starting from food and groceries to electrical appliances and drugs and cosmetics and fashion.
Hence, this concludes the definition of General Merchandise Wholesaler along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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