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What is a Retailer Wholesaler?

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  • Originally Written By: Stephanie Taylor Christensen
  • Revised By: C. Mitchell
  • Edited By: J.T. Gale
  • Last Modified Date: 13 November 2016
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A retail wholesaler is a distributor who purchases a high volume of goods directly from a factory or manufacturer, then re-sells those goods to retail stores where they are in turn sold to consumers. Wholesalers are usually corporations, but in some situations they’re also individuals. It’s often possible for stores to bypass wholesalers and buy their merchandise directly, but using one of these sorts companies can save a lot of stress and can often lead to lower prices, too. Wholesalers typically have access to goods that aren’t freely available to others in the marketplace and usually also have long-term relationships with manufacturers that can lead to preferential pricing and delivery deals.

Basic Concept

In most cases, a retail wholesaler works as a middleman for the sale of any number of goods. Modern manufacturing and distribution requires many different players that move things from initial production to final sale. Wholesalers are some of the most important people when it comes to getting something off of the manufacturing or processing floor and into the hands of the store owners who will then sell it to consumers directly.

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These sorts of professionals are most common in industries that rely on mass-produced goods like clothing or housewares, though they can sometimes be involved in food and beverage sales, too. Their main role is to cultivate relationships with manufacturers or processors directly and make deals to buy large quantities of product for a reduced price. The arrangement usually advantages the manufacturers because they’re able to guarantee very high run numbers and can count on fixed sales, and it works well for most wholesalers, too, since the low price they get usually mean that they can turn a pretty high profit.

Advantages of Bulk Purchasing

Unless a store is very big or has a huge client base, it’s not likely than it will need to order more than a small sampling of each available product. Most manufacturers will sell small quantities like this, but their pricing is usually better for high-volume orders. This is where wholesalers come in. Most are able to place massive orders for the lowest possible price, then they, rather than the manufacturer, will coordinate shipment and delivery to a range of different stores. Many retail wholesalers work regionally, and supply a number of different shops and stores over a large area.

Importance of Relationships

Many of the most successful wholesalers have spent years cultivating relationships with manufacturers and store owners both. These relationships are usually one of the key reasons the distributors are able to give and get such good deals, though this isn’t usually something that can be bought or learned. It has to be built on trust and, usually, time.

Once the distributor purchases the items from the manufacturer, he or she will usually contact potential buyers at the retail level. In most cases, transactions can be expedited quicker with two parties who understand the goals and have an established trust. A retailer wholesaler who understands the business needs of his or her retail customers is also able to offer a service by offering the purchase opportunity on goods that the retailer truly needs.

Excess Merchandise and Sale Opportunities

Relationships also usually allow the distributor to be on a first-call basis with a manufacturer when the manufacturer has excess merchandise that needs to be moved. Some factors that could contribute to these sorts of situations include excess include an unusual climate that prevents shipment or a social event like a wedding being canceled, both of which cannot be controlled. Others reasons can be due to a canceled purchase from a customer, a change in product design, or a change in industry need.

Manufacturers often depend on wholesalers in these situations to help unload excess merchandise, and they often offer staggeringly low rates in order to get rid of the materials that, for whatever reason, aren’t needed anymore. Selling everything at once clears out warehouse space and also saves labor time when it comes to managing smaller sales. Wholesalers can often turn the biggest profits on these sorts of goods, since they can typically be resold at huge markeups.

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