Wholesaling involves selling goods in large quantities to traders for resale. A wholesaler is a trader who buys goods in bulk from producers/manufactures for resale to retailers at a profit.
There are wholesalers who carry out retailing but that do not make them retailers.
Classification of wholesalers/Types of wholesalers
Wholesalers may be classified depending on a number of factors. These factors include;
ii) According to the range of goods hey handle
Under this classification, wholesalers may be any of the following;
The word merchandise means goods.
The general merchandise wholesalers stock and sell a wide variety of goods e.g. hardware, clothes, cosmetics and foodstuffs. The retailers who buy from these wholesalers are thus able to get a wide variety of goods for resale.
They are also called general wholesalers or full-line wholesalers
b) General line wholesalers
These are wholesalers who deal in a wide variety of goods within the same line e.g. textbooks, duplicating papers and other types of stationary.
c) Specialized wholesalers
These are wholesalers who deal in a particular good from a given line e.g. in the line of grains, they may specialize in maize only.
ii) According to the geographical area in which they operate.
Under this category wholesalers may be;
These are wholesalers who supply goods to traders in all parts of the country.
They establish warehouses or depots in different areas from Kenya National Trading Corporation (KNTC)
b) Regional Wholesalers
These are wholesalers who supply goods to certain parts of the country only. They may cover a county, District, division etc.
iii) According to their method of operation;
Under this classification, wholesalers can be;
b) Mobile wholesalers/Track distributors; these are wholesalers who use vehicles to move from place to place supplying goods to retailers e.g. soda distributors, bread distributors, beer distributors etc.
c) Rack jobbers
These wholesalers specialize in selling certain/particular products to other specialized wholesalers. They buy goods from producers or from other countries for reselling.
E.g. some wholesalers buy horticultural products from producers and sell to other wholesalers in urban areas
Rack jobbers usually stock their goods in shelves or racks from which customers select the goods to buy. Customers may be allowed to pay for the goods after they have sold them.
d) Drop shippers
These are wholesalers who make orders for goods from manufacturers/producers but do not take them from the producer’s premises. They then look for the buyers for the goods and supply the goods directly from the producers
Alternate classification of wholesalers
An alternative classification of wholesalers is given below;
Functions of a wholesaler
These can be discussed as services rendered to producers, retailers and to consumers.
Services of wholesalers to the producers
Business Studies Notes Form 1 - 4