Wholesale Sector

Wholesaling bridges the gap between manufacturers and retailers or companies processing goods further, such as food producers. Wholesalers offer services similar to those of retailers but do not serve the end customer. For manufacturers, wholesalers offer access to the markets for selling goods and services, many by offering physical distribution facilities including sophisticated delivery logistics. Wholesalers operate in almost all industries, even distributing gas and electricity as well as package holidays. The main advantages for customers (in comparison to buying from manufacturers directly) are as follows:

• A high level of availability, enabling the reduction of own stock and quick responses to demand shifts
• A wide range of products
• Specialized pricing schemes frequently based on discounts according to monthly or annual buying volume
• Technical support and technical instruction of the customers' employees

Different wholesale formats have emerged in the course of time with varying degrees of importance all over the world:

• General merchandisers offer product assortments relevant to smaller retailers and convenience stores not affiliated with a powerful chain.
• Specialty merchandisers sell a narrow but deep assortment of goods, that is, they offer few categories but a wide range within those categories—for instance, screws and fasteners of all types and sizes, and pet food catering to all breeds and nutritional requirements, in addition to pet accessories, such as collars, leashes, and toys—and focus on certain types of clients. Mostly, wholesalers are well known within their industry and offer additional product-related services.
• Cash-and-carry wholesalers run their core business through selling foods to clients who need to pay immediately (e.g., pub owners or street traders) and handle the delivery on their own. In addition, the cash-and-carry outlets usually offer a wide range of nonfood assortments.
• Truck wholesalers are still common in some parts of the world. They visit their customers regularly in an assigned geographical territory. In contrast to sales representatives, they deliver their products immediately to the business customers.
• Rack jobber wholesalers are similar to truck wholesalers, but rack jobbers are responsible for managing a particular space in the outlets of their clients, for example, in-house magazines or the floor space of a supermarket.
• Drop shippers or brokers do not engage in the physical distribution process but take ownership of the products or services they provide. Drop shippers act as the interface between the customer and the supplier, receiving orders from the former and placing them with the latter, who deliver directly to the customer. Their services are used mostly for large orders to cut down on transportation and handling costs. Brokers, on the other hand, bring buyers and sellers together in a single transaction, do not take ownership of the goods, and are paid on a commission basis.

Drop shippers and brokers base their business on exploiting information not accessible to their clients. Thus, their business models are threatened by the digital information diffusion e-commerce offers. Customers could bypass the wholesale level of the supply chain, but of course, wholesalers aim to broaden their business scope by adding their own internet-based facilities. Interestingly, the concept of wholesaling was developed and the leading wholesale companies were founded in times of the brick-and-mortar business.

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