Definition: A wholesaler is a company that buys products from manufacturers and sells them at low prices to retailers or other wholesalers.
What Does Wholesaler Mean?
In the consumer world, there are often many companies that buy and sell products before they reach the hands of the consumer. Products usually are bought and sold between manufacturers, wholesalers, and retailers before a consumer actually buys the product.
All consumer goods and products start at the manufacturer. The manufacturer most often designs and produces the product. The manufacturer then sells the finished product to a wholesaler because wholesalers often have relationships with retailers and distribution chains that manufacturers don’t have. The wholesaler in turn sells the product to a retailer which can market and sell the product to an end customer.
This is the standard chain of sales: manufacturer, wholesaler, and retailer. There are many exceptions to the rule however. Companies like Sam’s Club and BJ’s are wholesalers that buy their products from manufacturers and sell them directly to the public. Wholesalers can sell the products cheaper than the retailers because they were purchased cheaper. Wholesalers also don’t have the costs of retail store upkeep and marketing costs. That’s why Sam’s Club and BJ’s are often called warehouses. Instead of a glamorous retail store, they choose to sell out of a warehouse.
Apple Computer is also an exception. Apple manufacturers computers and electronic devices and then sells them directly to the consumer in their retail stores. Apple doesn’t use a wholesaler or a retailer. It acts as both.