Wholesale Categories: Distribution Method

Wholesalers offer distribution options similar to those of retailers in that customers may or may not be able to physically visit the wholesaler’s location to acquire their purchase. For the purposes of our discussion of wholesaling, this category is separated based on whether or not a stationary location exists from which the wholesaler conducts the physical movement of products.

Stationary Location

In most common wholesaler arrangements, the wholesaler has one or more fixed facilities where product handling operations take place. However, while stationary wholesalers share the characteristic of a permanent location, they often differ on whether customers can visit these facilities:

  • Customer Accessible – At certain wholesaler locations buyers can shop at the facility. In fact, retail warehouse clubs, such as Costco and Sam’s Club, also function as wholesalers for qualifying businesses. In addition to selecting their orders, buyers are responsible for making their own arrangements to transport their purchases.
  • Not Customer Accessible – Most operations classified as wholesalers do not permit buyers to visit their facility in order to select items, rather buyers place orders over the internet, by phone, or through person-to-person contact with wholesaler’s representatives. In more advanced business relationships, the buyer’s inventory management system will automatically place orders (for more see Managing Product Movement Tutorial). Also, in most cases, the wholesaler takes responsibility for product delivery.
Non-Stationary Location

Not all wholesalers carry inventory at a stationary location. In fact, some do not carry inventory at all.

  • Mobile – Several specialized wholesalers transport products to the customer’s location using vans or trucks. Buyers then have the ability to purchase product by either walking through the mobile facility or ordering from the wholesaler, who then selects the items from the vehicle.
  • No Facilities – Some wholesalers do not have physical locations that store products. Instead, these operations rely on others, such as delivery companies, to ship products from one location (e.g., manufacturer) to the buyer’s place of business.