What is Wholesaling?

Wholesaling is a distribution channel function where one organization buys products from supplying firms with the primary intention of redistributing to other organizations (but, in general, not to the final consumer). A wholesaler is an organization providing the necessary means to: 1) allow suppliers (e.g., manufacturers) to reach organizational buyers (e.g., retailers, business buyers), and 2) allow certain business buyers to purchase products which they may not be able to otherwise purchase. According to the 2012 U.S. Economic Census for Wholesale Trade, in the U.S. alone there are over 420,000 wholesale operations that generate nearly $7.8 trillion in annual sales and employ nearly 6 million.

While many large retailers and even manufacturers have centralized facilities and carry out the same tasks as wholesalers, we do not classify these as wholesalers since these relationships only involve one other party, the buyer. Thus, a distinguishing characteristic of wholesalers is they offer distribution activities for BOTH a supplying party and for a purchasing party. For our discussion of wholesalers, we will primarily focus on wholesalers who sell to other resellers, such as retailers.

While most of our discussion in this tutorial focuses on wholesalers and their distribution of physical products, it is also important to understand that wholesalers exists in service and utility industries. For instances, wholesalers can be found in such industries as mortgage creation, vacation rental, and electricity distribution.