The Wholesaler
A wholesaler is a trader who buys in bulk from the manufacturer and sells to the retailer in smaller quantities.
To the manufacturer: advertises the producer’s goods, finds markets for new products, provides market information, finances the producer by paying on time or in advance, and sometimes completes part of production (packaging, blending, transporting).
To the retailer: makes a large variety of goods available in smaller quantities, helps stabilise prices by maintaining stock, transports goods (reducing the retailer’s cost), and finances retailers through trade credit — though this carries the risk of not being repaid.
Types of Wholesaler
- Local wholesaler: operates in a limited area, with smaller but easier-to-manage sales.
- Regional wholesaler: supplies at the regional level, operating at a larger scale for more profit.
- General wholesaler: sells a great variety of goods to retailers across a region, so every retailer finds their supplies in one place.
- Specialized wholesaler: sells goods of a particular type at large scale, offering better quality within that speciality.
The Retailer
A retailer buys goods from the wholesaler and sells in smaller quantities to the consumer.
To the wholesaler: finds new markets (being closer to consumers), may repair goods damaged in transit, prepares goods for sale (blending, packaging, grading), and reports changes in consumer taste.
To the consumer: sells in small quantities affordable to low-income buyers, grants credit to reliable customers, provides after-sales services (delivery, repairs, guarantees), and stocks a variety of goods for the consumer to choose from.
Why a Retailer May Trade Directly With the Producer
This can happen when the retailer has enough capital, is located near the producer, can order online or by email, deals in heavy household goods (like refrigerators or TVs), benefits from good transport and communication links, has strong ties with the manufacturer, or wants to stamp their own trademark on the product.
