By Tim Staines
A wholesaler is a middleman who links manufacturers with retailers, and in some cases, with direct consumers. Typically, a wholesaler buys large quantities of merchandise from manufacturers and then sells them – also in substantial quantities – to retailers who ultimately sell these goods to consumers. In some cases, a wholesaler can sell directly to consumers – but in such cases, the consumer has to pay a price to the wholesaler that is slightly higher than what the wholesaler charges a retailer.
How Wholesalers Operate
Wholesalers buy merchandise in bulk from manufacturers, and as they sell in bulk, their profits are not governed on the rate they charge per-piece. Rather, wholesalers charge a small margin on their purchase cost and sell them to retailers, provided the retailer picks up a minimum quantity. If the retailer is interested in picking up a smaller lot then the specified minimum quantity, then the wholesaler charges a higher margin.
Wholesalers deal with many manufacturers, stock their merchandise in their huge warehouses and then sell (and deliver) this merchandise to many retailers and consumers, which is why they are considered an important link in the economic chain of any country. The main expenses of wholesalers are the purchase cost of goods, and expenses on handling, warehousing (storing) and transportation.
The Advantages of Buying From Wholesalers
Both retailers and direct consumers benefit when they buy from wholesalers and the economy as a whole benefits too, and here’s why:
1. The best benefit one can derive from a wholesaler is cheaper prices. The wholesaler buys in bulk from the manufacturer, and as his investment is large, he is eager to sell the merchandise off quick and then buy something else so that his capital keeps rotating. So, he charges a very small margin on the goods, and therefore, buying from a wholesaler is almost like buying from a manufacturer.
2. Because the wholesaler keeps rotating his stocks frequently, his customers are assured of fresh, newly manufactured products. Plus, as the products are stored safely in the wholesaler’s warehouse, they are protected from the elements – rain, wind and sun.
3. A wholesaler typically stocks merchandise produced by many manufacturers. Hence, his customers get to select from a wide range of merchandise.
4. Wholesalers are equipped with sophisticated cargo handling vehicles and machinery, which handle the movement of goods in their warehouses. This ensures that the buyer gets a product that is not broken or damaged, except maybe in rare cases. Also, wholesalers appoint quality inspectors who check the incoming merchandise for defects – this too ensures that a buyer gets defect-free goods.
5. Wholesalers keep the price line stable because they want the goods to be sold and off their warehouse shelves in a hurry. They buy directly from manufacturers cutting out intermediaries in between and are more interested in moving their products off the shelves rather than hiking the per-piece rates of merchandise.
6. The wholesaler is a direct link between manufacturers and retailers/consumers – this ensures that the distribution costs incurred by the buyer are nil.
7. There are many wholesalers across America, and most have an online presence. This competition ensures that none of them arbitrarily raises prices. If you suspect any of them of jacking up the prices, all you have to do is take your business to his competitor.
To sum up, wholesalers are reliable, they sell quality merchandise and most importantly, sell it at cheap rates – all of which are good reasons to take your business direct to a wholesaler and start saving cash.
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