Merchant wholesaler: functions and types. - SS1 Commerce Lesson Note

Merchant wholesalers are a type of wholesaler that operates as independent businesses buying goods from manufacturers or other sources and selling them to retailers, businesses, or other wholesalers. They take ownership of the products they purchase and play a crucial role in the distribution process.

Functions of Merchant Wholesalers:

·         Sourcing and Procurement: Merchant wholesalers source products from manufacturers, importers, or other suppliers. They negotiate purchasing terms, quantity, and pricing to secure inventory for resale.  

·         Inventory Management: Merchant wholesalers maintain large inventories in their warehouses or distribution centers. They store, organize, and track the products to ensure availability when needed.

·         Bulk Purchasing: Wholesalers often buy products in bulk quantities from manufacturers, taking advantage of economies of scale. Bulk purchasing allows them to obtain better pricing and supply discounts to their customers.

·         Packaging and Labeling: Wholesalers may repackage or relabel products to meet specific requirements or market demands. They add branding or informational labels and ensure products are properly packaged for distribution.

·         Marketing and Promotion: Merchant wholesalers promote and market the products they carry to attract buyers. They provide product information, catalogs, and samples to retailers and businesses, helping to create demand and generate sales.

·         Sales and Distribution: Wholesalers act as intermediaries, selling products to retailers, businesses, or other wholesalers. They take orders, handle transactions, and arrange for the delivery or pickup of products.

Types of Merchant Wholesalers:

·         General Merchandise Wholesalers: These wholesalers deal with a wide range of products across different industries. They may carry various categories of goods, such as clothing, electronics, household items, and more.

·         Specialty Wholesalers: Specialty wholesalers focus on specific product categories or industries. They have in-depth knowledge and expertise in those particular areas, allowing them to provide specialized services and products to retailers.

·         Limited-Line Wholesalers: Limited-line wholesalers specialize in a narrower range of products within a specific industry. For example, a limited-line wholesaler may exclusively deal with computer hardware or automotive parts.

·         Cash and Carry Wholesalers: Cash and carry wholesalers operate on a self-service basis. Retailers or businesses visit their warehouses, select the products they need, pay in cash, and take the goods with them immediately. This type of wholesaler is often used by smaller retailers who can't meet large minimum order requirements.

·         Drop Shippers: Drop shippers act as intermediaries between retailers and manufacturers. They do not hold inventory but instead facilitate the shipping of products directly from the manufacturer to the retailer's customers. They handle order processing, packaging, and shipping logistics.