Wholesale Trade Businesses --- A middleman between the manufacturer and the retailer
When customers come to a retail business looking for a product or just to browse, they find products which the retailer has purchased to stock the shelves and storerooms of the business. These items purchased by the retailer do not usually come directly from a factory or manufacturer. They are usually provided by a wholesaler. The wholesale trade business has developed to provide retailers with a way to purchase their items for resale or to operate their retail business.
Wholesale trade businesses are a middleman between the manufacturer and the retailer. As such, the wholesale trade business coordinates the purchase of products from the factory or supplier and stores them until purchased by the retailer for reselling to the customer.
Customers of wholesale trade businesses may also purchase raw materials which will be used to produce other products. So a wholesale business may actually purchase materials from another wholesale business in the course of the manufacture of a product. As an example, a tire manufacturing business may purchase steel from a factory and use it in the manufacture of steel-belted tires. The tire factory uses the steel and other products during its manufacturing process. The next step is for the tire to be sold to a wholesaler who in turn sells the tire to an automobile manufacturer. All these are wholesale trade businesses.
During the operation of a retail business, or even a wholesale business, there are needed products for the efficient operation of the business. Things like pencils and paper, mailing supplies, computers, desks and chairs for example are all necessary for the business. These items are made available to the company as a wholesale trade item.
Sometimes large retail stores advertise themselves as wholesale trade, when in fact they are not. Their prices may be somewhat reduced to the general public because of large volume buying, but they are still operating a retail business. Sometimes the lines are blurred between retail and wholesale. In this situation, a contractor for example will receive reduced prices on items which they need for their building business, while at the same time regular customers pay a retail price.
Some people may feel that the middleman should be eliminated completely in order to save money for the end consumer, but in fact wholesale trade businesses perform a needed and useful function in serving as regional centers for ease of distribution of products.
by Nathan.Smarty 19 years ago