Wholesaler – definition and meaning

A wholesaler is a company or individual that purchases great quantities of products from manufacturers, farmers, other producers and vendors, stores them in warehouses, and sells them on to retailers (shops and stores) and businesses.

Wholesalers are the merchant middlemen who sell mainly to retailers, other merchants, commercial, industrial, or institutional users principally for resale or business use.

The wholesaler’s business model is based on being the intermediary – the go-between – between a product’s manufacturer and other businesses that want to sell that product.

According to Collins.Dictionary.com, a wholesaler is:

“A wholesaler is a person whose business is buying large quantities of goods and selling them in smaller amounts, for example to shops.”

Wholesaler - widgetsAs this image illustrates, the widget wholesaler (fictitious) buys in huge quantities – in bulk – from the widget producer. It sells – in smaller batches – to hundreds of widget shops across the country. Consumers walk into the shops and buy single widgets.

The price at which wholesalers sell to retailers is known as the wholesale price.

Wholesaler vs. distributor

A wholesaler who carries only non-competing lines or products is usually known as a distributor. Distributors generally perform similar roles to wholesalers, but tend to provide more complex services.

Unlike official distributors of a product, most wholesalers do not offer high levels of product support. While distributors are supported directly by the producer, in most cases the wholesalers are not.

While wholesalers may sell competing products simultaneously – such as rival brands of toothpaste – distributors do not.

Wholesalers do not sell to individual consumers. If you – an individual consumer – want to purchase something for personal use, you cannot buy it from a wholesaler – you go to a retailer.

The Online Etymology Dictionary says that the adjective ‘Wholesale’ dates back to 15th-century Britain, with the meaning ‘in large quantities’. It came from the adjective ‘Whole’ plus ‘Sale’. Etymology is the study of the origin of words and how their forms and meanings evolved over time.

Largest Wholesalers in USAFor seven of the top ten wholesalers in American listed above, chain stores represent more than half their total sales. (Data Source: Wikipedia)

Wholesaler buys in bulk

Wholesalers buy goods in bulk – very large quantities. Typically, they reassemble, sort, repackage, or distribute the products in smaller units.

As they purchase goods in much greater quantities than we do in the shops, they pay a much lower unit price.

The wholesaler needs to buy more cheaply from producers than it sells on to retailers, because it needs to make a profit in order to survive as a business.

The difference between how much a business or person paid for something compared to how much they sold it for is known as the margin. The increase in price is called the markup.

While wholesalers generally operate from independent premises, wholesale marketing of some goods takes place at specific markets. For example, foodstuffs are commonly sold in wholesale markets where many traders congregate.

Using a wholesaler makes business sense

Imagine you own a small business that sells mobile phone covers/protectors. On average, you sell 500 covers each month.

You find a mobile phone cover manufacturer that will sell all the units you want to resell at $9 each. However, consumers are not willing to pay more than $11 for each one, which gives you a tiny $2 profit on each sale.

If you want to earn more than $1,000 per month, you are going to have to either sell in much larger numbers, or find a significantly cheaper supplier.

A phone cover wholesaler, however, who purchases 100,000 phone covers each month from the manufacturer, is able to get them at a much lower price – $2.50 each.

That wholesaler is willing to sell you 500 phone covers monthly at $4.50 each. Now, your profit (margin) – if you sell them for $11 – is $6.50 per cover. That’s a big increase from your previous profit per cover of just $2. Thanks to the wholesaler, your monthly profit has jumped from $1,000 to $3,250.

‘Wholesaler’ in other languages

European Languages: Grossiste (French), Grossista (Portuguese, Italian), Mayorista (Spanish), Großhändler (German), Оптовик, Χονδρέμπορος (Greek), Groothandelaar (Dutch), Engrossalg (Danish), Grossist (Norwegian, Swedish), Hurtownik (Polish), tukkukauppias (Finnish), Velkoobchodník (Czech), veľkoobchodník (Slovak), Nagykereskedő (Hungarian), Angrosist (Romanian), grosist (Albanian), Велетрговац (Serbian), and Toptancı (Turkish).

Asian Languages: تاجر جملة (Arabic), סִיטוֹנַאי (Hebrew), عمده فروش (Persian), پلورونکی (Pashto), تھوک فروش (Urdu), થોક વેપારી (Gujarati), थोक विक्रेता (Hindi), পাইকার (Bengali), थोक व्यापारी (Nepali), 批发商 (Chinese), Wholesaler (Filipino), Grosir (Indonesian), Pemborong (Malay), ผู้ค้าส่ง (Thai), Bán sỉ (Vietnamese), 도매상 (Korean), and 卸売業者 (Japanese).

African Languages: Muuzaji (Swahili), አከፋፋይ (Amharic), Wholesaler (Yoruba, Hausa), and Umthengisi (Zulu).

Video – What is a wholesaler?

This Edspira video talks about what wholesalers are, what they do, and why businesses use them.