February 26, 2021

Main Types & Benefits of Wholesalers in The Business Scene

3 min read
When you are about to set foot into the business world, you’ll come face to face with terms like manufacturer, wholesalers, retailer, drop shipper, etc. For an average person, these terms might be confusing to get a grasp on.  We’ll be touching on the wholesale side of things in this article. But what is it? What Does a Wholesaler do?  A wholesaler is a person who acquires the merchandise in bulk from a manufacturer and sells it to either a person or an organization. What a wholesaler usually can’t do is sell to the end customer of that merchandise.  They are often considered as middle agents or intermediaries between producers and consumers. Roles of a wholesaler include transport of goods, storage of goods, and supplying businesses with products.  Types of Wholesalers Online wholesalers are mainly categorized into 3 types. Let’s discuss each one of them.
  • Manufacturers 
The primary role of manufacturers in the distribution channel is to sell their own products on a wholesale level, without any 3rd party involvement. Some even own warehouses where they stock and maintain their merchandise, while others merely deal in sales. 
  • Merchant Wholesaler
The most common type of wholesalers are the merchant wholesalers. Their main purpose is to acquire products in bulk, store them in warehouses, and distribute them to retailers in smaller quantities.  These types of wholesalers go by many names like jobbers, distributors, supply houses, assemblers, importers, etc. They also provide services within a relatively small area.  Merchant wholesalers are further categorized into 2 types; full-service wholesalers and limited-service wholesalers. Full-service wholesalers mostly handle products at large volumes and provide a full range of services from stocking inventories to logistics. This type of merchant wholesaler deals in all kinds of merchandise ranging from groceries to electronics.   Limited-service wholesalers offer fewer services as compared to full-service wholesalers.  They only specialize in specific services like running a cash-and-carry, selling directly from vehicles, drop shipping, etc. 
  • Agents and Brokers
Agents, brokers, and commission merchants are independent middlemen who actively take part in business negotiations.  They act on behalf of a client and are compensated in the form of commissions on sales. Brokers and agents usually deal with non-competing products from several manufacturers. This type of wholesaler is most popular with the businesses who operate on limited capital and cannot afford their own sales force. Benefits of Wholesalers .
  • Better Deals, Better Profits
Buying directly from wholesalers can allow you to acquire the products with ease and land better deals. Since wholesalers acquire products from several suppliers, you’ll only have to deal with one wholesaler. Even if you decide to source products from multiple wholesalers, you’ll find competitive pricing. Chances of a wholesaler overcharging you reduce significantly.  Additionally, if you build strong business relations with a wholesaler, it’s possible that they will offer exclusive deals to you. Exclusivity can also mean that your orders will be prioritized more over others. 
  • Freedom of Order Quantity
Wholesalers purchase their products in bulk so that you don’t have to. Since the minimum order quantity is significantly lower than that of the manufacturer, your orders can be smaller in size.  As merchandise will arrive in a smaller quantity, you won’t have to worry about storage problems or damaged goods.
  • Saves x Time
Acquiring all the items from a wholesaler at once is much faster than getting each one from a separate manufacturer. It not only allows you to save time but also lets you focus your efforts on other matters that need attention. 
  • Geographically Spread out 
Wholesalers are distributed over large geographical areas. They have sales offices operating from several locations. This makes product sourcing a much easier task.  Final Thoughts Once you’ll get into the business itself, you’ll quickly understand these terms. Being a wholesaler holds a lot of benefits for you. However, not everyone can handle the hustle and bustle, so be sure to be prepared before getting into the swing of things.

Leave a Reply

Your email address will not be published. Required fields are marked *

Call Us