April 20, 2018

What is Wholesale?

Wholesale Definition:

Wholesale is selling a lot of products. Products are often bought from a wholesale supplier and are meant to be sold further. However, buyers may also be bulk consumers too. Wholesaling is something between vendors and retail distribution.

In other words, wholesaling is selling products to distributors but not the end-users. Wholesalers usually deal with the bigger quantity of products than retailers do, as they split large consignment of goods and sell a smaller batch of goods than they get themselves from vendors.

Who is a Wholesaler, a Distributor, and a Retailer?

Now you may ask what's the difference between a wholesaler, a distributor and a retailer. Let's define them one by one:

  • A wholesaler is a company or an entrepreneur that make bulk orders to a vendor at wholesale prices for the purpose of further reselling to retailers.
  • A distributor is a middleman or one of the middlemen in the chain who specializes in bringing goods or services offered by vendors to consumers. A distributor may be either a branch establishment or an independent company/entrepreneur that acts on a contract basis.
  • A retailer is a company or an entrepreneur that sell goods to consumers (private persons). As opposed to wholesalers and distributors the goods retailers get are not subject to resell but meant to be directly used.
Online Wholesale Business
Ecommerce is a game changer of a traditional conduct of business. If you are limited in budget and still think about starting your own online wholesale business, familiarize with "dropshipping". Dropshipping is a type of business activity on the Internet that involves disposal of vendors' goods by a middleman known as "dropshipper".

A dropshipper buys goods from vendors only after getting payment from a consumer. Profit of a middleman is generated by means of the difference between a wholesale price (which is paid a vendor by a dropshipper) and a retail price (which is paid a dropshipper by a consumer).

Dropshippers do not keep stock, so a warehouse with goods for sale is not needed. "How come?" you may ask. The point is that a dropshipper (1) sets up an online store with goods a vendor has in stock, (2) promotes products on Facebook, Instagram, Google Ads, or else. When the dropshipper gets an order and payment, (3) he/she forwards this order together with delivery details to a vendor.This vendor is in charge of packing and shipping the order to the customer. In the end, this customer doesn't get a notification about purchasing from a middleman (not a vendor).
Other Common Questions about Wholesale:
  • What's the difference between a wholesale price and a retail price? A wholesale price is a price for a product bought by bulk when a retail price is a price paid by an end-user mostly for one item. As a retail price is higher than a wholesale one, a middleman gets the difference between two prices as profit.
  • How to buy wholesale directly from the manufacturer? There are many online sources for finding wholesale manufacturers. Read about 8 wholesale supplier directories and learn to buy from them.
  • What to wholesale? Read a quick guide on how to find products to sell. It includes criteria an entrepreneur may follow. Note: the article concerns dropshipping products.
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Content Creator at Dropwow
Gulnur Ismailova
Content Creator at Dropwow