What is a Wholesaler, Wholesale Supplier, Distributor or Jobber – Definition

What Is A Wholesaler

A wholesaler, wholesale supplier, distributor or jobber, is an important link in a supply chain whose aim is to gets products from manufacturers to consumers. In general, it is the sale of goods to anyone other than a standard consumer.

• Manufacturers > Wholesaler > Retailers > Consumers.

The wholesaler or wholesale supplier takes over the distribution of goods on behalf of the manufacturer. The wholesaler gets goods from a manufacturer, usually in very large quantities, and sells them to retailers at a marked up price to cover the costs involved in storage. This allows the manufacturer to focus on developing and promoting its products.

• Some wholesale suppliers also establish themselves as a retail store, offering discounts on goods to customers. These types of wholesalers usually require customers to pay an annual fee for access to the items.
• In the United Kingdom, the Cash and Carry is a term used to describe a wholesale warehouse open to the general public on payment of a subscription.

Wholesalers make money by buying products from manufacturers at lower prices than other businesses would have to pay for the same products from the same manufacturers – usually through discounts based on volume buying.

Wholesaler Functions

Several important functions are served by a wholesalers. They are the go-between or middleman between manufacture and retailer. Because storage space cost money, factories and retail stores often have limited storage space. Manufacturers need space for shop-floor manufacturing operations. Retailers need space to display goods for sale. Neither wants to waist floor space on storage. A wholesaler, on the other hand, requires nothing more than large, secured warehouses designed for storage.

With all this storage space, wholesalers can obtain goods in very large quantities from many manufactures and hold this ‘stock’ in a central location enabling retailers to purchase numerous goods in smaller lots as and when required.

• Jobber: Someone who buys large quantities of goods and resells to merchants/retailers rather than to end customers.

Economically, the wholesaler helps the manufacturer to quickly turn a profit by buying or contracting for, their goods. With the goods being sold in bulk to wholesalers, the manufacturer can quickly make their required profit and concentrate on manufacturing.

Institutions and professional groups such as universities, hospitals, police and government departments usually purchase directly from wholesalers.

Why Use a Wholesaler?

I suspect anyone the least bit entrepreneurial will immediately think, “Why not just cut out the middleman, the wholesaler?” or “Why not buy directly from the manufacturer and make a huge profit?”

Sorry, it generally doesn’t work this way for these reasons;

• Manufacturers give wholesalers better prices than they give retailers because wholesalers buy huge quantities of goods from the manufacturer at regular intervals. Could you sell 50K of the same item each month? Could you complete on these terms?
• Some manufacturers are simple unwilling to sell to retailers and only deal through wholesaler suppliers.
• Secure storage is a primary function of wholesalers. Their ability to store huge quantities of products purchased from many manufacturers in large, secure, warehouses is a real boon to retail businesses. Could you bear the cost of building or renting those kinds of storage facilities?

Is Wholesaling a Good Business to Get Into?

As a wholesaler you can make a real killing providing, as with any business, you buy and sell the right products at the right price. Getting into the wholesale business in another matter. Start-up capital requirements for wholesale suppliers can be astronomical depending upon your market niche and storage requirements.

Providing you have the storage facilities and the contacts to be able to find and make the deals there is no reason why you cannot become a wholesaler.