What is a Wholesaler?
A wholesaler is an individual who purchases products from manufacturers and stocks them in bulk qualities. A wholesaler can store a particular product or a product category, or a wide range of products. Since they stock products in bulk, their pricing is usually lower than that of retailers.
How does a wholesaler work in supply chain management?
The wholesaler purchases products from a manufacturer at a discounted or bulk pricing and sells them to the retailers or other businesses at a maximum price, also known as MRP (Maximum Retail Price). The retailer then rebrands the product and sells them to the direct consumers. Wholesalers stock products and prepares them for sale to either retailers or direct customers.
What are the types of Wholesaling
The three board-category wholesalers are
1. Merchant wholesalers
Merchant wholesalers acquire, take title to, store, and physically handle items in big numbers before reselling them in smaller amounts to retailers, industrial, commercial, or institutional businesses, and other wholesalers.
Depending on their services, these wholesalers may be referred to as wholesalers, jobbers, distributors, industrial distributors, supply houses, assemblers, importers, and exporters.
2. Dropshippers
Dropshippers are wholesalers who stock products and sell them to customers through retailers online. Dropshippers hold the inventory for the retailers to sell products without managing inventory or making any prior investments. Dropshipper ships the product directly to the customers when a retailer orders.
3. Manufacturers sales office
Manufacturers open their wholesale shops apart from their manufacturing units to sell products to retailers and end customers in bulk and single units. Some manufacturer stores stock inventory, while others only use it for display.
What are the difference between Wholesaling and Retailing
The three key differences between wholesaling and retailing are
- Wholesalers buy products in bulk from manufacturers directly at a lower price. Retailers purchase products from wholesalers and sell them at retail prices or MRP.
- The business reach of wholesalers is comparatively lower as they serve mostly retailers. The reach of retailers is high as they sell to the direct consumers.
- The capital investment is huge in wholesaling as you buy products in bulk, stock, and variety. Capital investment is usually lower as they need not stock huge inventories. Dropshipping also helps them sell products without even stocking them.