20 Oct
Table of content
- Introduction
- Types of Wholesalers based on:
- Conclusion
Introduction: Types of wholesalers
This dynamic world of business and Wholesale needs different types of wholesalers to fit in different role.
Wholesalers today can have different roles in the supply chain. This mainly depends on the business model, volume of business, types of products, the target location, etc.
Wholesalers go by various names like distributor, semi-wholesaler, reseller, merchant, agent, broker, etc. These names may or may not differ in the role but the core functionality of a wholesaler remains the same.
Let’s have a look at the different types of wholesalers and wholesaling businesses’.
Types of wholesalers based on: Functionality
1. Manufacturer wholesalers
Manufacturer wholesalers produce finished goods and distribute them directly to retailers. Therefore, they do not trade goods manufactured by other manufacturers.
By doing this they minimize their overhead expenses for warehousing, distribution, transportation, etc.
2. Retail wholesalers
Retail wholesalers sell goods to the Retailers. They also directly cater to the end consumers.
Hence, they are able to communicate directly with the end consumers and get appropriate information related to end consumers preferences.
Moreover, it reduces the distribution costs and increases the profit margin.
3. Merchant wholesalers
Merchant wholesalers practice traditional wholesale only. In short, they simply purchase bulk goods produced by manufacturers. Further, they sell them to the retailers.
They don’t plan to either manufacture the goods themselves or sell the goods they receive to the consumer!
To conclude, these wholesalers purely practice traditional wholesaling and nothing else.
4. Agents and Brokers
Agents or Brokers are middlemen who facilitate trade between manufacturers and retailers. Usually, they tie up with the manufacturer and help find buyers for the manufacturer’s goods.
As a result, they earn by receiving commission from the manufacturer for each sale.
5. Assemblers
Assemblers are another type of middlemen. These types of wholesalers are mainly seen dealing with agricultural produce.
They collect agricultural produce from small farmers.
Eventually, they sell it to commission agents, wholesalers, retailers, etc.
6. Drop Ship wholesaler
Drop shipping is currently in trend. Wholesalers or retailers who drop-ship, complete the sale of a product. Subsequently, their manufacturer will directly dispatch the goods to the customer.
In this case, the wholesaler doesn’t require to handle the product.
7. Online wholesaler
Online wholesalers sell their products on online ecommerce marketplaces or their personal website or social media.
Moreover, they also regularly offer discounts as they tend to reduce their overhead costs such as rent and transportation.
Therefore, they can market it for less purchase price and and still make profit.
8. Discount wholesalers
These kind of wholesalers will deal in discounted goods. Normally, these goods are discounted because they are either discontinued, or returned or refurbished.
Types of wholesalers based on: Niche
1. General Merchandise wholesalers
General wholesalers do not trade just one single line of products but deal with a variety of goods. They keep products from several categories in the inventory.
2. General line wholesalers
These wholesalers do not sell multiple categories of products and focus only on one.
In other words, they sell various varieties of products that come under that single category.
For example, a wholesaler dealing in footwear will stock only sandals, shoes and flip-flops from a few brands.
3. Specialty/Specific product wholesalers
Specialist wholesalers deal with specific goods. It can even be a single item!
They don’t stock up inventory of a variety of products.
For instance, if these wholesalers sell groceries, they will only deal in tea or coffee and not any other grocery item.
Types of wholesalers based on: Reach
1. Local wholesalers
Local wholesalers operate locally and sell products only to local retailers and consumers.
Their business is only limited to a city or district!
Furthermore, this helps create a strong network and presence in the local market. This because the wholesaler is only focusing on the local market and consumers.
2. Regional wholesalers
Regional wholesalers operate in a specific region. This region can be greater than a district but smaller than a country.
This includes setting up operations on a state level. Regional wholesalers can extend their business into adjacent states as well.
For instance; Maharashtra, or a combination of Maharashtra and Goa.
3. National wholesalers
National wholesalers have a well established network across the country.
As a result, these wholesale firms need to maintain multiple offices at strategic places. They distribute products all over the country through their warehouses.
4. Global wholesalers
Global wholesalers are usually involved in import and export. Some of them may specifically deal either in import or in export trade, and some will deal in both.
Wholesalers dealing in import, import products from various countries and stock them in their warehouses.
These wholesalers then distribute these goods to other wholesalers and retailers.
Wholesalers dealing in export, export products to other countries that are collected from manufacturers in their own country.
Conclusion
All these types of wholesale traders can even follow a mixture of the above defined activities as per their convenience. All wholesalers have different goals to accomplish, hence they follow different processes.
Understanding the supply chain, products you will deal with and the market is extremely important. Choosing a product for your business is a vital task and should be given time to research upon.
If you understand the supply chain ecosystem, you can somehow work around and create hybrid processes for wholesaling as per your convenience to draw maximum profit from your business.
We hope this blog was helpful and provided insightful information for you to choose your wholesale business model.
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