Wholesaler

Written by Kathleen Gagne
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What is a Wholesaler?

A wholesaler is defined as a distributor who sells products (usually in bulk) to middlemen, retailers, or institutions. A wholesaler does not commonly sell to individual consumers. Consumers may, however, receive shipments of individual orders from wholesalers when the wholesaler engages in drop shipping for retailers or other vendors.

A wholesaler can sell anything from farm produce to cars to cleaning supplies. Wholesalers generally work from warehouses, often maintaining a section of the warehouse as an office from which they conduct their transactions, primarily by phone or computer. In these transactions, wholesalers are usually responsible for implementing the shipping mechanism for their products.

Wholesalers and Drop Shipping

As a rule, wholesalers are shouldering all of the risk for the bulk products they purchase and resell. For example, if a wholesaler buys tons of tomatoes and is unable to sell them before they spoil, the wholesaler will experience a loss. In many cases, the wholesaler carries insurance on purchased goods to cover losses that occur.

Some wholesalers work with online vendors who sell directly to consumers. In the same way that major retail chains have taken phone or Internet orders for decades, these online vendors take an order for a product, require payment in advance, and then request shipment of the order from the wholesaler. This is an instance in which the wholesaler is still technically selling to a retailer, the vendor, but is shipping to a single consumer. Shipments from wholesalers to individual consumers are called drop shipments.


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