For the clarity’s sake, wholesaling is an integral part of the distribution channel in which an organization acquires products and services directly from the supplying firms. The core objective of wholesaling is to redistribute the necessary goods and services to other organizations including the retailers and final consumer (in some occasions).
Ideally, wholesaling offers the necessary means for suppliers to reach the organizational buyers. Similarly, it allows certain business buyers to easily buy products, such as wholesale women’s flip flops, that they might not otherwise be able to buy. The 2002 Census of Wholesale trade suggests that there are more than 450,000 wholesale operations in the US alone.
Retailers alongside many other users acquire goods directly from wholesalers. They then sell these products at a better price so they can be able to cover certain costs while generating tangible profits. The Supply Chain Management, usually abbreviated as SCM, was developed way back in 1980s to address the need for maximizing efficiency in various business operations.
In the banking specialty, wholesaling may imply to the services that are carefully designed to suit large, institutional clients such as pension funds, real estate developers, and large corporations.
This is in a rather sharp contrast to retail banking that involves provision of services to standard and individual clienteles. In some circumstances, a wholesaler acts as a sponsor of a mutual fund, typically acting as an underwriter in a certain new issue.
Although a good number of large retailers as well as manufacturers boast centralized facilities that allow them to convey the same responsibilities as wholesalers, they aren’t classified as wholesalers. This is because their relationship solely encompasses one party, which is the final buyer.
Apparently, the most distinguishing characteristic of wholesaling is that they provide various distribution tasks, which suit both a purchasing party and a supplying party. Wholesalers can be classified depending on the following factors:
– Products carried
– Service level
– Promotional activities
– Distribution method
Wholesalers are truly essential in business, because they provide access to the products. The wholesalers are largely in the business to offer services and products to buyers, such as retailers. Retailers may not buy goods and services directly from suppliers because they will be required to pay higher prices.
Wholesalers often sell their goods, such as wholesale women’s flip flops, to a large number of purchasers. Therefore, their order quantities often match and even surpass those of large retailers, allowing them to acquire goods and services at lower prices from the suppliers.
In wholesaling, a wholesaler ought to pass these lower prices along to the final buyer (which can be a retailer), thus enabling them to maintain their competitive edge in business. In a nutshell—transacting through wholesalers is the only way certain retailers can stay competitive in their business operations.
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