Wholesale trade, also known as wholesaling, is a commercial activity carried out within the distribution of goods and services.
A wholesaler company purchases products in large quantities directly from the manufacturer and then sold them in smaller proportions to retailers.
The main characteristic of wholesale trade is that the wholesaler does not come into contact with the final consumer public.
It is the point that distinguishes it from the retailer, the commercial agent who is in charge of the items’ retail sale.
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In concrete terms, there is no classification into types of wholesalers that is standardized. It means that we can find different interpretations in the variety of these wholesale trade agents.
In this sense, we can establish categories such as:
Although they have relatively low sales volumes, these are wholesalers who are in charge of distributing goods to retailers.
They usually find in sectors where access is difficult or that they do not have the financial capacity to assume high transport, storage, and distribution.
These are companies that have a financial and operational structure large enough to handle huge volumes of merchandise.
It allows you to obtain special prices from the manufacturers, which generates succulent benefits for the marketing, storage, and transfer of the products.
Intermediary Wholesale Agents
It is a company that is generally in charge of storing and distributing the merchandise, but it does not acquire ownership over it in this process.
Generally, this type of wholesaler receives its earnings in the form of commissions.
It is the most classic type of wholesaler. In this case, the company acquires large volumes of products that pass into its property and then sell.
At present, many manufacturers to increase their sales levels offer different business strategies to minimize the number of intermediaries.
On the one hand, it has a beneficial effect on the final consumer in terms of the product’s final price as long as there is no excessively high increase in the storage and delivery of the purchased goods.
But while this represents an advantage for the end consumer, it removes wholesalers from the equation.
It is also observed with verticalization marketing strategies with other manufacturers or retailers, leaving out the wholesaler.
To this is added the market trends that tend to personalize items, which breaks with the business scheme of standardization of products typical of wholesaling.
These are all problems that wholesale companies face. However, at present, there are enough niches in various markets that require the participation of wholesalers in the distribution chains of numerous types of products.
Wholesale trade, given its characteristics, offers a set of advantages and disadvantages to the same distribution chain. Among the main benefits we have:
They allow large quantities of merchandise to move in one go from manufacturer to retailer. They are thus preventing excess products from accumulating for the first and inventories running out for the second.
It reduces the costs of storage and distribution of products for the manufacturer.
It allows retailers to access volumes of merchandise that they can purchase or manage for final marketing.
They facilitate the access of products in remote places.
They help to mature the markets and strengthen the commercial relationships present in them.
Among the disadvantages of wholesale trade we have:
Wholesale trade is characterized by acquiring products from manufacturers and other wholesalers and distributing them to other wholesalers, distributors, retailers, and even manufacturers, but not to end consumers—the wholesale trade’s primary functions.
The performance of wholesalers can classify according to different criteria:
An organizes wholesale activity into 7 branches:
Most wholesalers are proprietary by the purchase of the products they distribute. However, specific figures may only have possession of the products, or even those only act on behalf of the seller:
Broker: It puts the producer and buyer in contact. It is a neutral intermediary whose main objective is to advise on commercial negotiations. Generally acts as a representative of the selling party, which is the one who usually contracts and pays for their services.
Commercial Agent or Representative: It acts as an intermediary between the manufacturer and the retailer. It usually has a stable and long-term relationship with the manufacturer, charging a commission for the sales made.
Commissioner: These are temporary collaborators who receive financial compensation for the services provided.
It should note the interest that many pharmacists have in testing the pharmaceutical industry’s direct purchase possibilities. Some through pharmacy groups (with the first objective of buying together) and others directly due to their high capacity in terms of sales volume.