Types Of Merchant Wholesalers
What is a merchant wholesalers?
A merchant wholesaler is a business that buys large quantities of products or goods from manufacturers, producers, or other suppliers and sells them in smaller quantities to retailers or other businesses. Merchant wholesalers often act as go-betweens for the manufacturer and the retailer or end user. They may also provide their consumers with other services like warehousing, shipping, and finance. Merchant wholesalers may specialise in a particular product, such as electronics or textiles, or they may serve a certain industry, such as the foodservice business.
Merchant wholesalers are divided into two types: full-service wholesalers and limited-service wholesalers: There are three types of full-service wholesalers, and there are five types of limited service wholesalers.
Types Of Merchant Wholesalers
1. Full-service Wholesaler
Full-service Wholesalers carry out all of the functions of a wholesaler. Customers can get a variety of services from them. They buy and sell goods, divide them, arrange transportation and storage, arrange finance, offer credit, carry risk, assist in promotional activities, collect information about the market, and so on. They offer a variety of services to both producers and retailers.
Full-service merchandise wholesalers can be further classified into three classes:
General Merchandise Wholesaler
A general merchandise wholesaler sells a variety of commodities. This sort of wholesaler buys and sells medications, building materials, perishable and non-perishable foodstuffs, cosmetics, clothing, sporting and electrical products, furniture, and so on. These wholesalers are more likely to be located in the early stages of marketing development. However, in this era of expanding specialisation, this form of wholesaler is becoming rare.
A limited-line wholesaler sells only one type of product. A food product line distributor sells items such as tea, coffee, cooking oil, canned fruits, and seafood. Electrical wholesalers supply bulbs, tubes, cables, holders, heaters, and other items. A general merchandise wholesaler sells goods from all product lines, whereas a limited-line wholesaler sells just goods from one product line. However, there are similarities in the services offered by both sorts of wholesalers.
A speciality wholesaler specialises in a single type of exceptional item from a certain product category. Customers’ unique needs can be met by a wholesaler who solely deals in oil, electrical items, or medications, for example. A speciality wholesaler can only sell the products of a single manufacturer. This type of wholesaler may offer both producers and customers high-level technical advice and services. As a result, the popularity of this sort of wholesaler is growing today.
2. Limited Service Wholesaler
A limited service wholesaler is a merchant wholesaler who acquires ownership and rights to commodities. However, he merely performs a subset of the functions normally handled by a wholesaler. This type of wholesaler does not provide all of the services that a full-service wholesaler does. A limited service wholesaler does only a few limited functions that can meet certain needs.
Service is limited. Wholesalers are classified as cash and carry wholesalers, truck wholesalers, rack jobbers, drop shippers, mail-order wholesalers, and so on.
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Cash and carry Wholesalers provide such a limited service that they neither sell items on credit to clients nor provide transportation. Retailers and other clients drive themselves to their cash and carry wholesalers’ warehouses, load the products they desire, and pay cash to the wholesalers. Typically, such intermediaries deal in a narrow product line of items, such as foodstuffs, construction materials, electrical goods, office supplies, and so on.
Truck wholesalers provide transportation to consumers for the purpose of inspecting and selecting goods. In general, such wholesalers follow a set route and assist merchants or clients in determining their needs. These intermediaries offer commodities in modest quantities.
They arrange for the transportation of items for customers on their own. Truck wholesalers provide perishable commodities to small food stores, such as fruits, seafood, and vegetables. These wholesalers also sell chips, cigarette products, and other such items. They are very essential in marketplaces. Truck wholesalers’ key selling point is that they offer limited services for cash.
Rack jobbers are wholesalers that purchase and stock goods for stores. They lack their own warehouse. They transport goods on their own vehicles, fill store racks, display them, and even handle inventory/records of retailer stick goods. The job of a retailer is to provide a location for items. Rack jobbers also accept unsold merchandise.
Such items are sold through retailers. Rack jobbers provide commodities such as dolls, food, pharmaceuticals, and other goods with a limited life cycle. By serving customers, rack jobbers carry the risk of producers and merchants. Retailers no longer have to worry about procuring items or dealing with unsold inventory thanks to the services of rack jobbers.
Drop shipper wholesalers own the items and sign sales contracts, but they are not responsible for physical shipping or delivery. They get large-quantity orders from industrial customers, other distributors, and retailers. They place orders with manufacturers for the requisite quantity of items.
The goods are then delivered directly to customers by the manufacturers. Drop shippers acquire the right to and ownership of the goods. Physical product stock remains with the manufacturer or in a public warehouse. These wholesalers facilitate exchanges through sales activity. They might or might not offer financing, but they do not convey products.
Mail-order wholesalers sell items to merchants, industrial users, and institutional consumers using a catalogue that is mailed to them. Customers peruse the catalogues and place orders for the items they require. Then wholesalers send them the requested goods by mail. Mail-order wholesalers are considered a different class due to their distinct characteristics, albeit occupying a nominal place in the overall wholesale industry.
Mail-order wholesalers typically sell cosmetics, special goods, motor parts, and other items to retailers and other clients over the mail. They also sell limited quantities of light consumer goods via mail.
What are the types of merchant wholesalers?
The types of merchant wholesalers are full-service wholesalers and limited-service wholesalers.
What is a full-service wholesaler?
A full-service wholesaler offers a wide range of services to its customers, such as inventory management, financing, and marketing support. The also have big warehouse and distribution centres to transport and store goods.
What is a limited-service wholesaler?
A limited-service wholesaler offers fewer services compared to full-service wholesaler, however they provide benefits such as bulk purchasing discounts and transportation services.
What is a drop shipper?
A drop shipper is a type of wholesaler that does not keep inventory on hand but arranges for goods to be shipped directly from the manufacturer to the customers.