Wholesale distributors act as intermediaries between manufacturers and resellers, purchasing large quantities of products at a reduced price and selling them to retailers. This allows manufacturers to manage fewer relationships and resellers to take advantage of cost savings. Wholesale distributors are common in various industries.
Wholesale distributors act as an intermediary between manufacturers who create a product and resellers who sell the product to the end user. In some cases, wholesalers sell directly to the public, but more often than not, they only sell to a company that sells those items. The main advantage of wholesalers is that they can purchase large quantities of a product at a reduced price because they are buying enough to meet the needs of many stores or retailers. Such distributors are a common part of the sales chain in many different industries.
The primary function of wholesale distributors is to act as an intermediary for manufacturers and retailers. Manufacturers are companies that produce a product. This includes stamping, forming or machining specific parts such as screws, bolts, trims or sheet metal. It also includes farmers who produce food products. Other manufacturers buy from these two types of businesses and then produce a finished product, whether it’s a radio or a frozen burrito.
Resellers are companies that sell to the public, both consumers and other businesses. This includes retailers that have physical stores like grocery stores, department stores, and card stores. It also includes virtual businesses, such as online retailers.
In order for the public to buy a particular product, the product must somehow make its way from the manufacturer to the retailer. In many cases, however, the retailer is too busy to manage relationships with many individual manufacturers and unable to pay the higher costs associated with buying in small quantities. Manufacturers often face a similar problem. They are too busy to handle many small relationships and would much rather move large quantities of product at once than ship small orders over a period of time. This is where wholesale distributors come into play.
Wholesale distributors can negotiate a deal to purchase large quantities of goods from one manufacturer at a significantly reduced price. This makes the manufacturer happy because it frees up storage space in the warehouse and gives the manufacturer the working capital needed to produce more products. It also allows the manufacturer to manage only a small number of wholesaler relationships instead of a large number of retailer relationships, freeing up time to focus on the core competencies involved in building the product.
Involving wholesale distributors makes life easier for resellers as well. Resellers are also relieved of the burden of managing many relationships, creating more time to focus on selling. They are also able to take advantage of the cost savings gained through bulk purchasing, allowing them to reduce customer costs and hopefully sell more products or earn higher margins on the product they sell.
While wholesale suppliers make a living by branding the product before selling it to the retailer, the depth of the wholesaler’s purchase discount is such that the price is usually still much lower than what a retailer might negotiate on its own. Wholesale distributors are common in a number of industries. These include clothing, electronics, food, tools, household chemicals, office supplies, and more.
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