Wholesaling

Wholesale Formats: Part 2

• Truck – As the name suggests, truck wholesaling operations are primarily run out of a truck that is stocked with products.  These wholesalers often have assigned geographic territories where they regularly visit buyer’s locations.  In most cases these wholesalers offer specialty product lines with many being found in the retail food industry and the industrial markets. 
• Rack Jobber – Similar to truck wholesalers, the rack jobber also sells from a truck.  However, the main difference is that rack jobbers are assigned and manage space (i.e., racks) within a retailer’s store.  The rack jobber is then responsible for maintaining inventory and may even handle other marketing duties such as setting product price.  This form of wholesaling is most prominent with magazines, candy, bakery, and health-and-beauty products.  In some trades the name rack jobber is being replaced by the name service merchandiser.
• Drop Shipper – Wholesalers in this category never take physical possession of products, though they do take ownership.  Essentially they are shipping coordinators who receive orders from customers and then place the order with a product supplier.  Shipping is then arranged so that the supplier ships directly to the drop shipper’s customer.  Drop shipping is often most useful when very large orders are placed where transportation and product handling costs are high if there are too many distribution points.
• Broker– A far less obvious type of wholesaler is the broker, who is responsible for bringing buyers and sellers together.  However, brokers do not take ownership of products and often never handle the product.  Brokers are paid based on a pre-negotiated percentage of the sale (i.e., commission) by the side that hires their services.  In most cases the relationship that develops between the broker and the buyer and seller is short-term and only lasts through the purchase.  Brokers can be found in the food industry, importing/exporting and real estate.
• Agent – Similar to brokers, agents also bring buyers and seller together though they tend to work for clients for an extended period of time.  As with brokers, agents generally are paid on commission.  A common type of agent is the Manufacturers’ Representative who essentially assumes the role of a sales force for a client.  Manufacturers’ Reps may handle several non-competing product lines at the same time and during a single meeting with a perspective buyer may discuss many products.