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What Is Wholesaling?

Wholesaling involves selling products in bulk.
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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 December 2014
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Wholesaling is the process of selling goods and services to a client who will in turn resell those products to other consumers. Wholesalers can include retailers, organizations who market services to members, and companies that sell the purchased products under their own brand. Generally, wholesaling involves providing the customer with a discounted rate per item in exchange for buying the item in large amounts.

Wholesaling offers a number of benefits to a customer. First, the customer does not have to maintain manufacturing facilities to produce goods or services that are offered to the general public for sale. This can make it possible for the wholesale customer to maintain a relatively low overhead in the market, which in turn increases the customer’s ability to be competitive with larger companies. The wholesale client also saves money in terms of employee wages and benefits, since the company can operate with a smaller work force.

Going with a wholesaling solution also allows the customer to secure goods and services for resale at a lower unit price. Assuming the terms for payment are agreeable, this means that a wholesaler can resell the products at a reasonable profit and use payments from consumers to pay the wholesale provider in a relatively short period of time. This has the advantage of not tying up the assets of the wholesaler in covering Accounts Payable items, since the turnaround on the Receivables is adequate to handle the cost of securing products for resale.

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The wholesale provider also benefits from this type of transaction. Wholesaling usually involves selling products in bulk. This means that more products are moved out quickly and do not languish in warehouses. As a result, the wholesaler can maintain a smaller inventory and incur fewer taxes than would be possible otherwise.

There are a number of different wholesaling jobs available in many different industries. The telecommunications field is full of wholesalers who purchase long distance services, Internet access, and teleconferencing services from major providers and re-brand those services as their own. In like manner, retail and electrical wholesaling is not uncommon at all. The advent of the Internet has led to the development of virtual wholesaling opportunities, where businesses offer virtual products that were purchased from a supplier and re-branded for sale as a distinct product line.

While wholesaling of goods used to require that the wholesaler and the wholesale client be in relatively close proximity to one another, that is no longer the case. Many wholesale companies ship goods and supply services to businesses located around the world. This has made it possible for entrepreneurs to market all types of goods and services to a consumer base that is virtually unlimited.

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