Wholesaling is that ultimate, direct source to purchase from the manufactures before the products are distributed to other concerns, usually for reselling purposes. Buying wholesale is to buy at the lowest price you can get for something. But wholesalers are much more than that. Wholesale warehouses are the distribution centers to retailers as well as industrial, institutional and professional users. Wholesalers purchase in bulk, then distribute in bulk to these concerns and others at a discount because their customers are buying in mass quantities.
This affords everyone a better price when buying from a wholesaler. A wholesaler could be considered to be an original link in the supply chain of a distribution network. Wholesalers are usually very large organizations that hold large quantities of stock. A wholesaler's money comes from the large bulk they sell instead of the price per actual unit of each individual piece. Most wholesalers will impose a minimum quantity that can be bought at a set price.
They charge what is called "trade price". Trade price is not a constant, however. Trade price is used to set prices that can go up or down, depending on the quantities purchased.
A retailer might buy a bulk quantity of Yoyo candy bars at 20 cents a piece when buying a bulk of 250 pieces. Another retailer could buy Yoyo candy bars at 15 cents a piece by purchasing a bulk of 500 of these same candy bars. Both companies paid at trade prices, though. Trade price is often negotiated by the abilities of one customer purchasing vast amounts of bulk through the wholesaler throughout the year or in larger amounts. A company that will give the wholesaler more steady business through the year will certainly have a better set "trade price" agreement worked out with them than someone else that only buys a few bulk items a few months out of the year. Some wholesalers these days are also drop shipping for their customers.
This is great for the customer when they do not have to take care of this type of service for themselves any more. A few years ago, it was difficult to find any wholesalers that would drop ship for their customers. Today, things are different with competition for every dollar that's out there. More wholesalers than before will provide drop shipping to their customers. Some wholesalers don't advertise this service, but when asked to drop ship, they will.
Ask first before making any assumptions because there are still several wholesalers that will not drop ship. Of course, there is added cost for drop ship servicing, but the wholesaler that provides drop shipping takes this burden off of the customer's shoulders. Most often, it will be cheaper to have a wholesaler provide this service than the business had to pay to have this done themselves. A lot of smaller home business are getting into the act now. Finding wholesalers that will work with these type business can take some time to research.
It can be hard to find a good wholesaler for your small business if you are not knowledgeable about what to look for. Wholesaler source businesses are springing up more and more. These companies will do the research for small home based businesses and match them up to wholesalers that fit their needs and provide drop shipping service. The price for outsourcing a wholesaler source company can seem expensive, but reasonable when you consider the time it could take you to find the right wholesaler. Average price is around two hundred dollars per lifetime membership to join a wholesaler source company. Even with the advent of retail discount clubs like Costco and Sam's Club, there are still networks of individuals that create a business for the single purpose of getting a good "trade price" from a wholesaler company.
This type of group is usually a network of consumers that have joined together to realize the deepest discount prices on products possible. This is a consumer co-op type business that's express purpose is to create enough buying power within the group, so each member can realize a larger savings when buying in bulk from wholesalers. Overall, wholesalers help keep the economy alive and busy. Without wholesalers, it would be hard to imagine how the world we live in would function without it.
They are the root source from which almost everything our society depends on to live the way we do. Copyright (c) 2008 Tim Staines.
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