A retail wholesaler is a distributor who buys a large quantity of goods directly from a factory or manufacturer and then resells them to retail stores, who then sell them to consumers. Wholesalers are usually corporations, but they can also be individuals in some cases. Although it is often possible for stores to avoid wholesalers and purchase their merchandise directly, using one of these companies can save a lot of time and money. Wholesalers typically have access to products that aren’t readily available to the general public, as well as long-term relationships with manufacturers that can result in preferential pricing and delivery.
The Fundamental Idea
A retail wholesaler, in most cases, acts as a middleman in the sale of a variety of goods. Many different players are required in modern manufacturing and distribution to move items from initial production to final sale. When it comes to getting something off the manufacturing or processing floor and into the hands of store owners, who will then sell it directly to consumers, wholesalers are crucial.
Professionals in this field are most commonly found in industries that rely on mass-produced goods, such as clothing or housewares, though they can also work in food and beverage sales. Their primary responsibility is to develop direct relationships with manufacturers or processors and to negotiate deals to purchase large quantities of product at a discounted price. The arrangement usually benefits manufacturers because they can guarantee very high run numbers and can count on fixed sales, and it also benefits most wholesalers because the low prices they receive usually mean that they can make a decent profit.
The Benefits of Bulk Purchasing
Unless a store is extremely large or has a large customer base, ordering more than a small sample of each available product is unlikely. Most manufacturers will sell small quantities like this, but their pricing for high-volume orders is usually better. This is where wholesalers enter the picture. Most are able to place large orders at the lowest possible price, then coordinate shipment and delivery to a variety of stores rather than the manufacturer. Many retail wholesalers operate on a regional scale, supplying a diverse range of shops and stores across a large geographic area.
Relationships are extremely important.
Many of the most successful wholesalers have spent years building relationships with manufacturers as well as store owners. These connections are usually one of the main reasons distributors are able to give and receive such good deals, though this isn’t something that can be learned or bought. It must be based on trust and, in most cases, time.
Following the purchase of the items from the manufacturer, the distributor will usually contact potential retail buyers. In most cases, transactions can be completed more quickly when two parties are on the same page and have built a relationship of trust. A retailer wholesaler who understands his or her retail customers’ business needs can also provide a service allowing the retailer to purchase goods that the retailer truly requires.
Excess Merchandise and Opportunities for Sales
Relationships also allow the distributor to be the first point of contact for a manufacturer when the latter has excess inventory that needs to be moved. Excessive factors that may contribute to these types of situations include an unusual climate that prevents shipment or the cancellation of a social event such as a wedding, both of which are uncontrollable. Other reasons include a customer’s canceled order, a change in product design, or a shift in industry demand.
In these situations, manufacturers frequently turn to wholesalers for assistance in unloading excess inventory, and wholesalers frequently offer shockingly low prices in order to get rid of materials that are no longer needed for whatever reason. When everything is sold at once, warehouse space is freed up, and labor time is saved when managing smaller sales. Because these items can typically be resold at huge markups, wholesalers can often make the most money on them.