12.2 Wholesaling - Introduction to Business

Overview of Wholesaling

• Wholesalers are key channel members in the supply chain that buy finished products from manufacturers and sell them to retailers or other businesses.
• They also sell products to various institutions such as schools and hospitals.
• Wholesalers may sell products to manufacturers for use in production.
• Some wholesalers also distribute to other wholesalers.

Types of Wholesalers

Merchant Wholesalers

• Merchant wholesalers account for 80% of wholesaling establishments.
• They conduct less than 60% of all wholesale sales.
• Merchant wholesalers buy goods from manufacturers and resell them to businesses, government agencies, other wholesalers, or retailers.
• They take title to the goods they sell (ownership of the products).

Agents and Brokers

• Agents and brokers facilitate the sale of products from producer to end user without taking title to the products.
• Manufacturers representatives (also known as manufacturers agents) represent noncompeting manufacturers.
  • They operate as independent agents, not salaried employees.
  • They earn commissions only on sales they make.
  • Found in industries like electronics, clothing, hardware, furniture, and toys.
• Brokers bring buyers and sellers together and receive commissions on sales.
  • Operate in markets where buyer-seller information is scarce, such as real estate, agriculture, insurance, and commodities.

Concept Check Questions

1. Define wholesaling, and describe what wholesalers do.
2. Describe merchant wholesalers.
3. Explain the difference between agents and brokers.

Additional Resources

• For deeper exploration of wholesaling, reference the provided OpenStax textbook URL.
• Explore related sections on distribution, retailing, and supply chain management in the textbook.

Attribution

• Access for free at OpenStax Introduction to Business
• This content is licensed under Creative Commons Attribution License.