Types of Wholesalers

Who are Wholesalers?

A wholesaler is a person or corporation that sells big quantities of items to retailers or other professional enterprises that are not end users. Wholesalers play an important role in the marketing channel setup. Most of the time, they serve numerous important services that are crucial to the seamless movement of commodities, ownership, finance, and information.

Wholesalers deal with a constrained selection of goods. They do, however, maintain various classifications of the goods they sell. The wholesalers serve as the intermediaries between manufacturers and retailers. In the distribution chain, they serve as the middleman. For the market distribution of the products, the manufacturers rely on them heavily.

Types of Wholesalers

The wholesalers can be classified into three types:

1. Merchant Wholesalers

These are the most popular wholesalers used in the private label, FMCG, and agricultural industries. Simply put, merchant wholesalers are the people that purchase products directly from manufacturers, keep them, and then resell them to customers. They aren’t restricted to selling exclusively to retail or only to online customers, and they may sell through any channel.

Any losses incurred in the process of purchasing and reselling the product must be paid for by the merchant wholesaler. Companies like Britannia and P&G utilise merchant wholesalers even in the FMCG industry. These wholesalers have greater control over the area in which they trade. They benefit because they make large purchases from the company and accept all of the associated risks. Additionally, they are in charge of the sales targets, which they consistently achieve.

2. Full-Service Merchant Wholesalers

Full-Service Wholesalers are also known as Full-function Wholesalers. They are the market’s second most popular type of wholesalers. They can be found most frequently in engineering or consumer durable products. As implied by the term, full-service wholesalers provide complete service to the final retailer. The products are sold to a reseller (in this case, a retailer) by these wholesalers who mostly work in the retail sector. The full-service wholesaler is responsible for everything except for product service. In the real world, many full-service wholesalers launch a second related services firm and begin providing services in addition to the products they are wholesaling. For example, a Videocon wholesaler just opened a Videocon service center.

As a consequence, they might receive both sales and servicing orders. However, in conceptual terms, servicing and maintenance of the goods is not a component of a full-service wholesaler. He is primarily responsible for sales, delivery, and financing. Full-Service Merchant Wholesalers can be further categorised into three parts:

• General Merchandise Wholesalers: General merchandise wholesalers are full-service merchant wholesalers who deal with a wide range of products with not much depth in any area. A wholesaler could trade in groceries, for example, selling products from a few manufacturers to retailers. A merchandiser of this type provides all services to the manufacturer, including warehousing, shipping, and finance. Such large general merchandisers often dominate a geographic region, selling merchandise to the majority of shops in that area. A general merchandiser often works with multiple brands, while others may only work with one major manufacturer for a certain line of merchandise.
• General Line Wholesaler: These wholesalers do not deal in a wide range of products. They choose a product category such as food, pharmaceuticals, electrical appliances, textiles, and so on, and sell a variety of brands and variants in the line they have selected. For example, a drug wholesaler will only stock medications and nothing else. He will stock a wide range of drugs and medicines.
• Specialty Wholesaler: These wholesalers specialise in limited items of products or even single merchandise. They do not maintain a range of items in stock. For example, if they sell groceries, they do not have a variety of items but just sell tea or coffee. As a result, they provide highly specialised services to retailers.

3. Limited-Service Merchant Wholesalers

Even though full-service merchant wholesalers carry out a product line, they provide their customers with a complete line of extra services. However, it may be possible that some of the customers may not want all services, or may not want to pay for some of the services. They may prefer to get lower prices for the product by sacrificing services. For those types of customers, Limited-Service Merchant Wholesalers came into existence. They are also known as Limited-Function Wholesalers. The Limited-Service Merchant Wholesalers are further classified as:

• Cash-and-Carry Wholesalers: Cash-and-carry wholesalers are a relatively new wholesale category in India, but they have been around for quite some time in other nations. The Wal-Mart corporation entered India using a cash-and-carry wholesale model. Cash-and-carry wholesaling allowed retailers to buy goods in bulk (typically in carton loads) at a lower price and resell them at a higher price in their retail shops. Cash-and-carry establishments are often huge warehouses with limited display and fewer employees. Goods are exclusively sold in bulk, and no credit lines are available.
  As a result, cash-and-carry wholesalers are classed as limited-service merchant wholesalers. Small businesses that can rely on cash-and-carry shops gain since they can buy items quickly and cheaply. Cash-and-carry wholesalers only trade in high-volume commodities like groceries and stationery. With the introduction of huge wholesale companies into India in the future, more cash-and-carry wholesalers can be projected.
• Truck Wholesalers: Truck wholesalers (also known as truck jobbers) are used by many small wholesalers in the Indian FMCG sector who serve small independently-owned retailers. These truck wholesalers often transport small quantities of perishable commodities (such as bread or biscuits) to retail locations where the retailer may check and purchase products from the truck. These truck wholesalers are often small businesses that stock a variety of multi-brand merchandise. They frequently do not provide credit lines and are usually owned by other major wholesalers. These wholesalers provide the distribution channel with key transportation and stocking services. They are also involved in the inventory management of small retailers.
• Direct Marketing Wholesalers: The way of operating things of these wholesalers is very much the same as that of the mail-order catalogue retailers and other direct marketers. Traditionally, these wholesalers used direct mail and catalogues took orders through phone and fax, and then forwarded the required merchandise to the buyers through mail or parcel. Direct Marketing Wholesalers have been the most important type of wholesaler in terms of reaching remote rural areas where the potential of opening a market is low. 
• Drop Shippers: Another name for these middlemen is Desk Jobbers. They approach the goods and conduct sales negotiations. They don’t actually take possession of the products. They collect orders from retailers or commercial purchasers and make arrangements for their delivery from the manufacturer to the customers. Drop shippers will become the legal proprietors of the products from the time the manufacturing contract is signed until the customer receives them in good condition.
  Such wholesalers are often seen in commodity markets, such as those for oil, coal, and iron ore where transaction volumes are frequently quite high. Drop shippers add value by connecting a number of scattered clients with suppliers and many of them are situated on a different continent.