Wholesale trade is one of the important intermediaries in the raw material supply chain. Thanks to them, goods are widely distributed and bring great economic benefits to both businesses and consumers.

In this article, Ms. Uptalent would like to share with you some information on the topic “What is wholesale?” “. Please follow to understand the role of these units in the economy!

CONTENTS:
1- What is wholesale?
2- Characteristics of the Wholesale model
3- Role of wholesale
4- Distinguish between Wholesaler, Distributor and Retailer
5- Some questions related to wholesale

1- What is wholesale?

Wholesale is understood as a wholesaler. These wholesalers sell products in bulk. They import goods directly from manufacturers or distributors and supply goods to retailers, without selling them to consumers.

Currently, it is one of the most popular forms of business. In this form, the wholesaler will sell large quantities of goods at a reduced price. Their profit comes from the difference between the sale price and the purchase price.

In addition to selling merchandise at wholesale prices in large quantities to small stores, some wholesalers also sell merchandise to buyers in small quantities at retail prices.

The above combination of wholesale and retail brings great efficiency to the wholesaler in terms of increasing sales and attracting customers. From there, they can promote their business development more quickly.

2- Characteristics of the Wholesale model

The wholesale form has the following outstanding features:

– Wholesalers import goods in large quantities and resell them at discounted prices to retailers and stores.

– The wholesaler does not directly supply goods to consumers. They only sell wholesale to retailers.

– Wholesalers do not need to promote their brands but only need to supply as many retailers as possible to increase the scale of their operations. This means that the more retailers there are, the more recognition the brand will have and the stronger the business will be.

– The wholesaler can do Drop-shipping to connect and create relationships with consumers. With this form, the retailer only needs to provide the order information, everything else will be done by the wholesaler.

– The selling price of wholesale units is extremely competitive. Therefore, it is very easy for them to develop a product trading network in foreign markets.

3- Role of wholesale

Wholesaler, distributor and retailer are three important merchandise distribution intermediaries in the supply chain. Among them, wholesalers are the units with the most extensive relationships with many parties. They are both buyers from manufacturers and distributors and direct sellers from consumers.

For the above reason, wholesalers have become one of the key points to bring all kinds of products and merchandise to the market. At the same time, they are also an important factor in the functioning of the market economy and serve as intermediaries connecting manufacturers with consumers.

In addition, the wholesaler also plays an important role in helping retailers reduce their operating costs and increase their revenue.

4- Distinguish between Wholesaler, Distributor and Retailer

As mentioned, wholesaler, distributor and retailer are three important intermediaries in the supply chain. In there:

– Wholesale trade is a unit that sells goods in large quantities. They only work with manufacturers and distributors and do not sell directly to consumers.

– The distributor is a distributor. They only work with the manufacturer. The quantity of goods they trade is much larger than that of wholesalers.

– The retailer is a retailer. They only buy goods in small quantities and sell them directly to consumers.

To easily distinguish the 3 objects above, you can rely on the following criteria:

Import source

– Wholesaler, importing goods from distributors and manufacturers.

– Distributor, importing goods from manufacturers.

– Retailer, importing goods from wholesalers.

Discount amount

– Wholesaler, high discount due to large quantity of goods.

– Distributor, the discount is very high, enough that they can still make a profit after giving it back to the wholesaler.

– Retailer, the discount rate is low because the quantity of goods purchased is not large.

To go out

– The wholesaler sells goods to retailers.

– The distributor sells goods to wholesalers.

– The retailer sells goods to consumers.

Quantity of goods sold

– Wholesaler, the quantity of goods sold is large.

– Distributor, the quantity of goods sold is very large.

– Retailer, small quantity of goods sold.

Investment

– Wholesaler, large investment capital.

– Distributor, very large investment capital.

– Retailer, low investment capital.

Risk level

– Wholesaler, high risk.

– Distributor, very high risk.

– Retailer, low risk.

Business model

– Moderate-scale wholesaler.

– Distributor, on a large commercial scale.

– Retailer, small business.

Professional articles

– Wholesaler, only focuses on trading certain types of goods.

– The distributor, similar to a wholesaler, only sells certain products.

– Retailer, trading a variety of products.

5- Some questions related to wholesale

5.1- What is the relationship between Wholesaler, Distributor and Retailer?

The above three units are all important elements of the supply chain. They maintain extremely close relationships and always interact and support each other in the process of supplying goods to the market.

The biggest difference between the three units is the quantity of goods they buy and sell.

5.2- How many types of wholesale are there?

Currently, there are two popular forms of wholesale, namely warehouse sales and drop shipping wholesale.

Each of these shapes is divided into smaller shapes. Specifically:

– Wholesale goods through warehouses come in two forms: drop shipping and shipping.

– Wholesale drop shipping also has two forms: drop shipping and shipping.

5.3- What are the advantages of wholesale?

Wholesale form has become a popular choice for many businesses due to its exceptional benefits such as:

– Can sell large quantities of goods in many different areas and locations.

– Great opportunity for commercial expansion.

– Save on marketing and customer service costs because retailers already do it.

– The wholesaler does not have to do the work of ordering and shipping because a retailer does it for them. The retailer will provide them with order information and they just need to handle the remaining work to get the product to customers.

– Convenient to expand business in the global market due to extremely competitive pricing.

5.4- What are the disadvantages of wholesale?

In addition to its advantages, the Wholesaler also has certain disadvantages. Such as:

– It is very difficult to control the process of promotion and delivery of products to customers by retailers. Wholesalers rely heavily on the marketing and customer service practices of retailers.

– Bulk orders are often high value, leading to many difficulties in debt and customer management.

5.5- What should wholesalers pay attention to?

Wholesale is a popular business method. Many people choose this form because of the benefits it can provide.

However, to be successful with this form, you should note the following:

– Ensure that sales activities are in harmony with the factory’s production schedule.

– There are certain items that distributors often order in very large quantities. For example, motorcycles, car seats, bicycles, etc.

– The business models and objectives of wholesalers and distributors are very different.

– Some manufacturers choose to sell directly to consumers to reduce middlemen in the supply chain.

5.6- What development opportunities for Wholesalers?

The strong development of the Internet and the rapid increase in shopping demand on e-commerce platforms have opened up more business opportunities for wholesalers.

Typical opportunities that wholesale may receive include:

Rapidly grow your business scale

In order to meet the diverse needs of customers, wholesalers have promoted the combination of wholesale and retail. This helps them expand the market and resolve inventory issues effectively.

Promote drop shipping

Dropshipping is a form in which the wholesaler will manage all stages of the sales process. The retailer’s task is simply to pass on the order information to them.

Through this form, wholesalers can achieve higher profit margins and connect more with customers instead of having to depend on retailers.

Business development in international markets

The advantage of a wholesaler is their ability to supply large quantities of products at very competitive prices. They can therefore easily develop their business abroad.

5.7- What are the challenges faced by wholesalers?

Besides the opportunities, the wholesaler also faces many challenges. Specifically:

Must create a brand with its own unique characteristics

As Uptalent said, wholesalers do not sell directly to consumers. Whether their image in the eyes of customers is good or bad depends greatly on the retailer.

Have a suitable marketing strategy

Wholesalers must proactively implement marketing campaigns to create consistency in brand image and messaging.

Because their customers are not consumers but retailers, they must find ways to stand out from their competitors and attract this audience.

Must have a large warehouse

The peculiarity of wholesalers is that they trade goods in large quantities. The need for sufficient storage space is therefore a very important issue.

In addition, they must also ensure reasonable management and arrangement of warehouses in order to create the most favorable conditions for the sale and preservation of goods in the warehouse without loss or damage.

So, Ms. Uptalent has just helped readers learn some information related to what wholesale business is. I hope that sharing this article has helped you better understand this form of business and can apply it effectively to help your business grow. Good luck!