Definition of a wholesaler: what is the role of this intermediary between retailers and producers?
What is the definition of a wholesaler?
It's true that wholesalers, importers, central purchasing agencies and subcontractors can all be a bit confusing!
And yet, understanding exactly what each one does enables retailers to make the right choices when it comes to selecting their suppliers, choices that will have an irreparable impact on the profitability of their business.
Today's focus is on wholesalers, the characteristics of their BtoB activity, their 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 trader in the wholesale trade, i.e. high-volume sales to other professionals.
His position is therefore traditionally between :
- the producer, i.e. the manufacturer of the products (although there are wholesalers who obtain their supplies 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 pointed out that wholesalers often specialise in a particular type of merchandise (electronic equipment, bazaar products, ready-to-wear clothing, etc.), even though 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, some of them work internationally. This is why these professionals are sometimes referred to as " exporters" or " importers". The terms " retailers" or " distributors" can also be considered synonyms for "wholesalers".
We then distinguish three sectors in which wholesalers operate:
- non-food consumption: this consists of 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 tinned or frozen foods, etc.);
- inter-industrial equipment: these are products intended for businesses 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 biggest retailers of goods from China.
On the food side, there is of course Metro, the supplier of food, but also of equipment and supplies for catering professionals. We can also mention the Rungis International Market, which brings together many wholesalers.
💡 Good to know: you can find wholesaler directories on the internet, such as Europas. This site brings together a large number of references, by business sector: agriculture and livestock, wood and furniture, electrical and electronic equipment, etc.
How does a wholesaler work?
A wholesaler buys large volumes on a continuous basis from a producer. They benefit from advantageous rates, thanks to :
- the quantity of goods 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. So the main job is to distribute the goods, which means that you have little or no involvement in the manufacturing process.
Another important point is that, before any resale, wholesalers also have to store and transport products.
In short, wholesalers wear many hats:
- Logistics functions, as we have just seen. These tasks involve adopting a policy aimed at rationalising costs as far as possible, while providing customers with a quality service. 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 demonstrating commercial intelligence in their dealings with both producers and retailers.
- Information. A good knowledge of the products sold is essential. They also need to be able to ensure accurate traceability.
- Financial functions. These involve being able to adopt the right pricing policy for your customers, and effectively manage the various financial flows.
💡 Good to know: not everyone can become a wholesaler overnight! To practise this profession, you need to obtain the appropriate licence.
☝️ As we have seen, wholesalers can diversify a great deal, and do not concentrate on a very specific category of goods. As a result, they may not have sufficient expertise (unlike a brand distributor or reseller) to provide after-sales service in the event of an incident (a technical problem with a mobile phone, for example).
Another difference with a brand distributor is that they 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?
Find out about the two main advantages:
Attractive prices
By using this type of supplier directly, you reduce the number of intermediaries who charge their own margins (margins that are inevitably reflected in the final price).
What's more, in the same way that a wholesaler buys from a producer, you can buy 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 so take advantage of unbeatable quantities and prices.
Saving time
Wholesalers make it much simpler to buy the goods you need for your business, by bringing everything together in one place. For a restaurant owner, for example, a trip to Metro is all it takes.
And the growth of online wholesaling is making it much easier to acquire products: just a few clicks and you can order what you need, wherever you are. Some sites are so well-stocked and structured that you can buy goods without having to go to multiple suppliers.
Article translated from French