Wholesalers are critical to distributing goods from manufacturers to retailers or end users. You help to bridge the gap between manufacturers and retailers by offering warehousing, transportation, and marketing services.
There are six major types of wholesalers, each with its characteristics, benefits, and drawbacks. So, if you are still determining your group, do not worry; we’ve covered you in today’s article. We will delve deeper into these six types of wholesalers.
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The 6 Categories of Wholesalers
Merchant wholesalers are the most common type of wholesaler, and you buy products directly from manufacturers and sell them to retailers or end consumers. You take ownership of the products and bear the risk of unsold inventory. You also provide services such as storage, transportation, marketing, and financing to retailers like everything that you need. Moreover, you often buy products in bulk like bulk toys, and sell them in smaller quantities to retailers, offering a convenient and cost-effective way for retailers to stock their inventory.
Agents and Brokers
Agents and brokers are wholesalers that do not take ownership of the products you sell. Instead, you operate as mediators between manufacturers and retailers, facilitating the sale of products on behalf of manufacturers.
You earn a commission on each sale you make like marking up 5 to 15% of the price from the manufacturers, but you do not bear the risk of unsold inventory, unlike the merchant. You also specialize in a particular industry or product category and have extensive knowledge of the products you sell such as in a real estate.
Manufacturers’ Sales Branches and Offices
Manufacturers’ sales branches and offices are wholesalers that manufacturers own. You sell products directly to retailers or end consumers, eliminating the need for intermediaries such as merchant wholesalers or agents. You also provide essential services such as marketing, product promotion, and customer service. Manufacturers’ sales branches and offices are especially common in industries such as automotive, electronics, and consumer goods.
Import/export wholesalers specialize in the import and export of goods between countries all around the world. You usually buy products from manufacturers in one country and sell them to retailers or wholesalers in another country. Import/export wholesalers have a broad knowledge of international trade regulations, shipping procedures, and customs obligations. You also provide services such as transportation, insurance, and financing that is very essential when we talk about shipping goods in the international market.
Drop shippers are wholesalers that do not keep an inventory of the products you sell, and this is one of the trending methods today. You function as mediators between retailers and manufacturers, facilitating the sale of products on behalf of manufacturers. When a retailer places an order, the drop shipper contacts the manufacturer, who ships the product directly to the retailer. Drop shipping is especially common in industries such as e-commerce and online marketplaces.
Cash-and-carry wholesalers are wholesalers that sell products directly to retailers or end consumers without offering credit or delivery services. You usually require customers to pay in cash (Cash on Delivery) or by credit card at the time of purchase and to transport the products themselves. Cash-and-carry wholesalers offer a convenient and cost-effective way for retailers or end consumers to buy products in bulk without the added cost of delivery or credit.
You now understand the six major types of wholesalers, each with its characteristics, benefits, and drawbacks. You play an essential part in the flow of goods from manufacturers to retailers or end users, and you can now quickly identify your group. By placing your wholesaler type, you can streamline your supply chain, reduce costs, and improve your bottom line.