Strictly speaking, although a wholesaler may own or control retail operations, wholesalers do not sell to end customers. Indeed, many wholesale operations are themselves owned by retailers or manufacturers. Wholesalers are extremely important in a variety of industries, including automobiles, grocery products, plumbing supplies, electrical supplies, and raw farm produce.
Wholesaling involves that part of the marketing process in which intermediaries, i.e., those between the producer and end consumer, buy and resell goods, making them available to an expanded buyer’s market over an expanded geographical market area. As middle agents, wholesalers are only effective when the price they charge for goods and services is less than the value placed by customers. By facilitating the transfer of title of goods, they are involved in the bulking and distributing of goods.
Although there are a number of ways to classify wholesalers, the categories used by the Census of Wholesale Trade are employed most often. The three types of wholesalers are:
1. Merchant Wholesalers
Merchant wholesalers are firms engaged primarily in buying, taking title to, storing (usually), and physically handling products in relatively large quantities and reselling the products in smaller quantities to retailers, industrial, commercial, or institutional concerns, and to other wholesalers. They go under many different names, such as wholesaler, jobber, distributor, industrial distributor, supply house, assembler, importer, exporter, and many others.
Agents, brokers, and commission merchants are also independent middlemen who do not (for the most part) take title to the goods in which they deal, but instead are actively involved in negotiatory functions of buying and selling while acting on behalf of their clients. They are usually compensated in the form of commissions on sales or purchases. Some of the more common types go under the names of manufacturers’ agents, commission merchants, brokers, selling agents, and import and export agents.
3. Manufacturers’ Agents
Manufacturers’ sales branches and offices are owned and operated by manufacturers but are physically separated from manufacturing plants. They are used primarily for the purpose of distributing the manufacturers’ own products at wholesale. Some have warehousing facilities where inventories are maintained, while others are merely sales offices. Some of them also wholesale allied and supplementary products purchased from other manufacturers.