Definition of a wholesaler: what is the role of this intermediary between retailer and producer?
What is the definition of a wholesaler?
It's true that the terms wholesaler, importer, central purchasing agency and subcontractor can be quite confusing!
And yet, understanding exactly what each one means enables retailers to make the right choices when it comes to selecting their suppliers, choices that will irrevocably impact the profitability of their business.
Focus today on the wholesaler, the characteristics of his BtoB activity, his role and the advantages of using this type of supplier.
What is a wholesaler?
Wholesaler: business definition
A wholesaler, or wholesale merchant, is defined as a merchant engaged in wholesale trade, i.e. high-volume sales to other professionals.
His position is therefore traditionally situated between :
- the producer, i.e. the manufacturer of the products (even if there are wholesalers who buy from other retailers),
- and the retailer, i.e. the professional who distributes the goods (shopkeepers, craftsmen or local authorities).
☝️ Wholesalers and retailers should not be confused, as retail sales are made directly to the consumer and involve small quantities.
Finally, it should be noted that wholesalers often specialize in a particular type of merchandise (electronic equipment, bazaar products, ready-to-wear clothing, etc.), even if some of them target a wider range of industries. One example is Alibaba, the famous Chinese supplier.
The different types of wholesaler
First of all, let's not forget that some of them work internationally. This is why these professionals are sometimes referred to as " exporters" or " importers". Resellers" and " distributors" are also synonyms for "wholesalers".
We then distinguish three sectors in which wholesalers operate:
- non-food consumption: this involves selling goods in their finished form (clothing, beauty products, toys, etc.);
- food consumption: goods here include all foodstuffs ready for consumption or processing (meat, vegetables, cereals, processed products such as canned or frozen foods, etc.);
- inter-industrial equipment: these are products intended for companies to carry out their activities (materials, tools, industrial hardware, etc.).
A few examples of wholesalers
There are many wholesalers on the market, of varying sizes. We've already mentioned Alibaba, one of the largest resellers of goods from China.
On the food side, we're of course thinking of Metro, the supplier not only of food, but also of equipment and supplies for foodservice professionals. We should also mention the Rungis International Market, which brings together numerous wholesalers.
💡 Good to know: it's possible to find wholesaler directories on the Internet, such as Europas. This site brings together a large number of references, by sector of activity: agriculture and livestock, wood and furniture, electrical and electronic equipment, etc.
How does a wholesaler work?
A wholesaler buys large volumes from a producer on an ongoing basis. This enables them to benefit from advantageous rates, thanks to :
- the quantity of merchandise purchased,
- the absence of intermediaries, and therefore the possibility of increasing margins.
The products are then marketed in smaller quantities ( batch sales), sometimes on a regular basis, to a retailer. In other words, it's mainly a question of distributing the merchandise, which means having little or no involvement in the manufacturing process.
Another important point: prior to any resale, the wholesale business also involves product storage and transport.
In short, this professional wears many hats:
- Logistics functions, as we have just seen. These missions involve adopting a policy aimed at rationalizing costs as much as possible, while providing quality service to the customer. This is why logistics can be a differentiating advantage over competitors (better delivery service, for example).
- Commercial functions. Wholesalers must have a thorough understanding of their market and how it is evolving, as well as commercial intelligence in their dealings with both producers and retailers.
- Information functions. A good knowledge of the products sold is essential. They must also be able to ensure precise traceability.
- Financial functions. These involve being able to adopt the right pricing policy for its customers, and effectively manage the various financial flows.
💡 Good to know: not everyone can become a wholesaler overnight! To practice this profession, you need the appropriate license.
☝️ As we have seen, a wholesaler can diversify considerably, and not focus on a very specific category of merchandise. As a result, they may not have the level of expertise (unlike a brand distributor or reseller) to provide after-sales service in the event of an incident (a technical problem with a cell phone, for example).
Another difference between a wholesaler and a brand distributor is that a wholesaler can market goods from competing companies.
What are the advantages of a wholesaler?
Are you a retailer wondering why you should use the services of a wholesaler?
Discover the two main advantages:
Attractive rates
By using this type of supplier directly, you reduce the number of middlemen who would apply their own margins (margins which are inevitably reflected in the final price).
What's more, in the same way that a wholesaler buys from a producer, you can purchase sufficiently large quantities of goods to benefit from attractive prices, or even free delivery.
Finally, thanks to the development of the Internet, it is now easier to work with wholesalers abroad, in China for example, and thus benefit from unbeatable quantities and prices.
Time-saving
Wholesalers greatly simplify the purchase of the goods you need for your business, by grouping everything together in one place. For a restaurateur, for example, a trip to Metro is all it takes.
And the rise of online wholesaling is making it much easier to acquire products: order what you need in just a few clicks, wherever you are. Some sites are so well-stocked and structured that you'll be able to source merchandise without having to multiply suppliers.
Article translated from French