What exactly is wholesale?

Wholesale is a term that gets used in a lot of different areas, but that does not necessarily mean that everyone knows exactly what it is. Wholesalers are essential in the world of retail, and can make life much easier for retailers with the opportunity to have a one-stop shop for all their products.

To explain further, Claire Shaw of SOS Wholesale; one of the largest wholesalers, shares her knowledge on the different types of wholesale and what the benefits can be.

The definition of wholesale

Simply put, wholesale is the selling of large quantities of products, usually to retailers. This is sometimes done by a business who purchases goods from manufacturers before warehousing them and selling them on, or by producers themselves who sell directly to retailers.

These goods might be staples for certain businesses but can also be trending products that the wholesalers know will be in high demand sometime in the future. It is important for a wholesaler to source the most cost-efficient products they can in order to make the greatest levels of profit.

Many wholesalers choose to specialise in a particular field, which could be anything from groceries to jewellery, fashion, car parts or even wedding supplies. By becoming an expert in one specific area, the wholesaler can not only ensure that they get the best products and deals, but also gain a degree of trust with their customers through extensive knowledge of the field.

Types of wholesale

There are different types of wholesalers, and each one performs a slightly different role. The most well-known type of wholesaler is the merchant wholesaler. Merchant wholesalers work on the basis of buying goods in large amounts and then selling them on in smaller quantities at a slightly higher price. These types of wholesalers stay on top of their products and market trends to ensure they know when to start offering them to retail businesses.

It is also possible to be a broker in the wholesale industry. These brokers do not own any of the products involved in the transaction, and instead negotiate deals between two individual parties and then claim a commission on the sale.

Sometimes manufactures hire sales and distribution agents to represent them to wholesalers. These can help to create deals that are tailored to individual cases.

Benefits of wholesale

One of the most significant benefits of wholesale is the money that it can save. When buying goods in large quantities, significant discounts can be taken advantage of. When selling these on, it is possible to increase the price and enjoy a healthy profit. Volume is the key to successful wholesaling, so the more you buy, the greater your opportunities for reselling.

Of course, a wholesaler is only as good as their supplier, so creating a reliable network of manufacturers is very important. This means a wholesaler can always be sure of having access to the stock they need in order to pass it on when retailers demand it.

A wholesale business model is one which is quite easy to upscale. Once you are part of the industry, it is possible to make connections with other markets can diversify and expand what you offer.

Wholesaling can be a very lucrative business and is one which is vital in keeping supply chains moving and ensuring that retailers have the stock that they want. It is very different to being a distributor, which is someone who wants to sell their own products to wholesalers and retailers. Instead, the wholesaler is the middle man who can carry a wide range of stock that allows retailers to fill their shelves with everything they need from one place.