A wholesaler is a company or individual that buys products in bulk from producers, farmers, other producers, and distributors. Wholesalers stock them and sell them to retailers (shops and stores) and businesses.
Wholesalers are intermediaries who primarily sell to retailers, other merchants, and commercial, industrial or institutional customers. They usually buy for resale or business purposes.
The business model of a wholesaler is based on an intermediary. They work between product manufacturers and other companies that want to sell their products.
According to Collins.Dictionary.com, wholesalers are:
“A wholesaler is someone who buys goods and sells them in small quantities, like someone who sells them in a store.”
Wholesalers focus on B2B instead of B2C. B2B refers to business-to-business where one company sells to another company. B2C stands for Business to Business. For example, retailers focus on B2C.
As shown in this diagram, an appliance retailer buys in bulk from a (hypothetical) appliance manufacturer. We sell in small batches to hundreds of small stores across the country. Consumers visit stores and buy individual devices.
A wholesaler is a wholesaler that sells only non-competing lines or products. Distributors generally play the same role as wholesalers. However, merchants offer more advanced services.
Unlike legitimate product distributors, most wholesalers do not support premium products. Resellers get direct support from the manufacturer, but wholesalers in most cases do not.
Wholesalers can simultaneously sell competing products, such as competing brands of toothpaste, while retailers do not.
Wholesalers do not sell to individual customers. If individual consumers want to buy something for themselves, they have to go to retailers who cannot buy from wholesalers.
Etymology of “broadcast”.
According to the Online Etymology Dictionary, the adjective “big” comes from 15th century England and means “a lot.” It comes from the adjective “total” and “sale”.
Etymology is the study of the origin of words and how their forms and meanings evolved.
Buy in bulk by bulk
Wholesalers buy products in bulk, so in very large quantities. They usually assemble, sort, repackage or break the product into smaller units.
Since you are buying in bulk compared to the store, the price is cheaper.
Wholesalers must make a profit to survive as a business, so they must buy more cheaply from manufacturers than sell to retailers.
The difference in price that people pay for something is called the markup.
Wholesalers generally operate from independent facilities, although some goods are sold to specific markets.
For example, food is usually sold in wholesale markets with many suppliers.
Why use wholesalers?
Imagine you have a small business that sells cases/protectors for cell phones. On average we buy 500 suitcases a month.
You can find a cell phone manufacturer that sells all the units they want for $9 each. However, customers don’t want to pay more than $11 each, so they only make $2 profit per sale.
If you want to make more than $1,000 a month, you’ll need to sell more or find a significantly cheaper supplier.
However, a phone case wholesaler buys 100,000 phone cases per month from a manufacturer and sells them for only $2.50 each.
This wholesaler wants to sell 500 phone cases per month for $4.50. So if you sell for $11, your profit per box (the difference) is $6.50.
This is a significant increase in profit from just $2 per cover. Our wholesaler increased our monthly profit from $1,000 to $3,250.
What is video bulk?
This video explains what wholesalers are, what they do and why companies use them.