Merchant wholesalers sell goods and services on their accounts. They purchase inventory from manufacturers and then sell the goods and services to businesses, government agencies, retailers, suppliers, or other wholesalers.
They play an inevitable role in indirect sales. Indirect sale is a term used to describe practices where the company engages third parties to sell its products or services to customers.
What are the Types of Merchant Wholesalers?
Merchant wholesalers can be categorized into two types depending on the spectrum of their services.
Full-Service Merchant Wholesaler
These types of merchant wholesalers provide complete services such as buying goods, breaking the bulk, storing, and delivering the products. Full-service merchant wholesalers also cater to market feedback and promote the products. They are also responsible for the financial success and losses.
Full-service merchant wholesalers can be further divided into the following categories:
General Merchandise Wholesalers
General merchandise wholesalers deal in a wide range of products. They do business in all sorts of products such as food items, cosmetics, jewelry, clothes, appliances, electronics, medicines, decorative items, steelware, and so on.
Nowadays, manufacturers prefer those wholesalers who operate in a specific niche to ensure the exclusivity of the products. That is why the trend for general merchandise wholesalers is dying.
Limited Line Wholesaler
They only deal in a specific category but cater to that niche’s subcategories. For example, if they are selling food-related products, limited-line wholesalers will deal in various types such as tea, noodles, cooking oil, and packed food items. The limited line means they only deal in a certain sort of product category.
Specialty Wholesaler
Specialty wholesalers are those that only deal in a specific category of products. They might deal in electronics, medicines, clothes, or cooking appliances. These types of wholesalers, because of their niche specifications, also contain a lot of technical information regarding the products.
Limited-Service Merchant Wholesaler
Merchant wholesalers who only provide a limited number of services are known as limited-service merchant wholesalers. They can be further categorized as follows:
Cash and Carry Wholesalers
Cash and carry wholesalers are those who provide cash-only services and do not deliver their products and services. Customers can visit their warehouses and purchase products via cash.
Truck Wholesalers
Truck wholesalers are also known as truck jobbers. They are those wholesalers who carry a rather limited number of products and sell them via their vehicles.
Rack Jobbers
Rack jobbers are those vendors who rent spaces in a retail store, display their products, sell them, and make profits.
Drop Shippers
Drop shippers are those types of merchant wholesalers who do not deliver the goods to the customers. They only market the product and receive orders from websites.
Mail Order
Mail order is the purchase of goods or services via catalogs. The wholesalers send their catalogs to retailers. The retailers then place an order for their desired products.
What is the Difference Between Merchant Wholesalers and Agent Wholesalers?
There are two main types of middlemen that exist in the indirect sales channel: merchant wholesalers and agent wholesalers.
One of the biggest differences between merchant wholesalers and agent wholesalers is the ownership of the products.
Merchant wholesalers take legal ownership of the products and have a share in the profit and loss of the product. They purchase the inventory they intend to sell. On the other hand, agent wholesalers are those who are only eligible for the commission they make via sales.
According to the Bureau of Labor Statistics, agent wholesalers or brokers are those wholesalers who can also trade via electronic means such as electronic data exchange on the Internet.
Both of these intermediaries exist in the wholesale industry, especially in the following industries:
- Apparel
- Electronics
- Furniture
- Hardware
What are the Examples of Merchant Wholesaler Companies in the US?
Some of the well-known merchant wholesalers companies in the US are as follows:
- McLane
- Cardinal Health
- Eby-Brown
- The HT Hackney Company
- Core-Mark
The Bottom Line
Merchant wholesalers are independent businesses that buy large quantities of products and then process them, store them, or redistribute them to other wholesalers or businesses to earn profits. That is why they are an essential part of the supply chain.
