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Economy

Types of Wholesalers. Broadly speaking

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Types of Wholesalers. Broadly speaking, wholesalers can be grouped into three categories, namely merchant wholesalers, brokers and agents, as well as producer head offices and branch offices.

1. Merchant Wholesalers

Merchant wholesalers are independent companies that have ownership rights to the merchandise they sell (they buy it first) and perform almost all of the wholesale functions.

They are also sometimes called distributors, jobbers, or mill supply houses. Most of the companies involved in the wholesaling business are classified as merchant wholesalers.

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Based on the number of wholesale functions performed, this wholesaler merchant can be further classified into:

a. Full-service wholesaler

Namely a merchant wholesaler that provides storage services, owns a fleet of sellers, sells on credit, delivers goods, and manages assistance. There are two types of full-service wholesalers, namely:

1. Merchant wholesalers

who sell primarily to retailers and provide a full range of services. Merchant wholesalers can also be further broken down into:

  • General merchandising wholesalers, selling a wide range of product lines and performing all wholesaler functions. This type is common in the hardware, pharmaceutical, and clothing industries.
  • General line wholesalers only sell a few product lines, but the number of products varies greatly in each line.
  • Specialty wholesaler (limited line wholesaler), specializes in a portion of the products within a particular product line. This type is often found in the nutritional food industry, automotive components, and seafood.

2. Industrial distributor

merchant wholesaler which sells mainly to manufacturers. They can sell a variety of merchandise, even specializing in certain lines. For example concentrating on maintenance, repair and operating equipment products, genuine product parts and other equipment.

b. Limited-service wholesalers

Merchant wholesalers that offer only a limited number of services to their suppliers and customers. There are several types of limited-service wholesalers, namely:

1. Truck wholesalers

namely wholesalers whose main activities are in the function of selling and shipping goods. Generally they sell certain products (such as bread and tobacco) to supermarkets, hospitals, hotels, restaurants, cafeterias, and others.

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2. Cash and candy wholesaler

wholesalers who sell goods that sell quickly in cash. does not deliver goods that have been purchased by customers, and only serves orders from buyers.

3. Dropshipper (desk jobber)

namely a wholesaler who only accepts orders from customers, contacts the manufacturer intended for the customer, but does not handle the delivery of the ordered goods to the customer. So, they are only responsible for the ordered goods since the order was received until the ordered goods are sent by the manufacturer. Dropshippers are needed to handle products that are large in size and usually sold in very large quantities, such as coal, wood, and chemicals.

4. Rack jobber,

namely wholesalers who specialize in non-food products. They distribute their products by truck to shops and the only services they offer are delivering goods, arranging storefront shelves, storing goods, and selling on credit. Usually, rack jobbers sell branded products that are often advertised, such as children’s toys, tools to support health and beauty.

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5. Producers cooperative

that specializes in marketing agricultural products. Its members strive to improve the quality of their products, brand their products, and promote both the product and the cooperative.

6. Mail order wholesalers

namely wholesalers who send catalogs of their wares to institutional customers or retailers and serve their orders by post or other efficient means. The products sold are usually in the form of jewelry, specialty foods, cosmetics, books, and others. Their customers are mostly in small areas and these wholesalers do not use a sales force to reach them.

2. Brokers and Agents

Brokers and agents are intermediaries whose only function is to facilitate transactions between sellers and buyers, therefore the goods sold do not belong to them. Usually they also specialize in certain products and customers.

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a. Brokers

Types of Wholesalers. Are intermediaries whose main function is to bring sellers and buyers together and help smooth the negotiation process. For that work they get a commission from the party who hired it.

In connection with this work, what the broker sells is information about what the buyer needs and which suppliers provide the required goods. Brokers are widely used by producers of seasonal products (such as vegetables and fruits) and the real estate industry.

Types of Wholesalers. Broadly speaking (foto/special)
Types of Wholesalers. Broadly speaking (foto/special)

b. Agents

are intermediaries who represent sellers or buyers in transactions and in this case the working relationship with their clients is more permanent than brokers. There are several kinds of agents, namely:

1. Manufacturer’s agents (manufacturer’s representatives)

namely intermediaries who work for several producers and handle non-competitive products (which may also be complementary) in an area based on certain agreements.

Manufacturer’s agents are usually used extensively to sell several types of consumer and industrial products, such as automotive, shoes, computers, diamonds, and others. 

Generally they are used when the company cannot afford to finance its own sales force, the company wants to introduce a new product, or wants to enter a new market.

Read too The role of prices in the economy

2. Selling agent

intermediaries who are authorized to sell all products of a company. This authority also includes responsibility for all marketing functions of the producer. Selling agents are often found in small companies in the textile, food, clothing and household furniture industries.

3. Buying agents

, namely intermediaries who carry out purchases, receipts, supervision, warehousing and delivery of goods for their customers. 

4. Commission agent

Intermediary commission agents who handle goods sent by producers to them, sell them, and hand over the money from the sale (minus commissions and certain fees) to the producers. They are generally widely used to market agricultural products. 

5. Auction companies

Namely companies that provide a place for sellers and buyers to meet and conduct transactions, as well as provide physical facilities to display the seller’s products.

3. Head Office and Retail/Manufacturer Branch Offices

Unlike merchant wholesalers, brokers and agents, producer branch offices are wholly owned by producers.

Producers will carry out wholesaling functions when there are no intermediaries to carry out wholesaling activities, the number of customers is very small and geographically concentrated, when orders are large and require separate attention.

  1. Head office and sales branch office. Manufacturers often open their own sales centers and branch offices so they can better control inventory, sales, and promotions.
  2. Purchasing office. Many retailers have opened purchasing offices in major markets, which function in the same way as agents and brokers (but are part of a buying organization).

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