The act of selling goods to anyone (a person or an organisation) other than the end consumer of the goods is called wholesaling. Wholesaling consists of the sale of the product in bulk quantities to retailers. The retailers then repackage and re-sale the product at a higher price in much smaller quantities. Wholesalers may have expertise in selling a single product or product category, or they can also offer a wide assortment of goods.
Sometimes retailers need a variety of goods or components of goods that can be obtained efficiently from a single source. In such cases, Wholesalers can also act as middlemen. They negotiate deals between wholesale and retail businesses.
Wholesale has a business to the business model. Retail has a business to consumer model. This is the primary difference between wholesale and retail businesses. Wholesale businesses can orbit around any type of non-durable or durable product.
Types of Wholesalers
Merchant wholesalers buy the product directly from the manufacturer, store the bought product and then sell it directly to the customer. These type of wholesalers are most commonly found in the FMCG industry, agriculture industry or private label industry.
2. Full-service Wholesalers – Retail Wholesalers
As the name would suggest, a full-service type of wholesaler gives a complete set of services to the end retailer. These type of retailers. These type of wholesalers are very commonly found in engineering products or consumer durables.
3. Limited-Service Wholesalers
A limited service wholesaler stockpiles the products of a company and then sells them in a limited channel. A limited service wholesaler does not have a large turnover. All channels of the company are not covered by the limited-service wholesaler.
4. Brokers and Agents
A broker has the producer or manufacturer of a commodity on one side and the buyer of the commodity on the other side. All brokers and agents take on no risk. A broker or agent has to work on getting the deal confirmed.
After the deal is cracked, the broker earns a commission on the said deal. An agent or broker is very commonly observed in chemical markets or the real estate industry.
5. Branches and mini offices
Branches and mini offices do not come under different types of wholesalers. Despite this, branches and mini offices are a common way for any company to start selling their products in the region they wanted to target.
6. Specialised wholesalers
Specialised wholesalers conduct wholesale business only of specific unique items. For example, a used car wholesaler who has expertise in dealing with or selling directly to customers or other used car dealers. This used car wholesaler knows all the ins and outs of a refurbishment of a used car or making a sale of a used car to consumers.
Examples – McLane
McLean is an American wholesale supply chain services company. The company dispenses grocery and non-food related items to convenience stores, drug stores, discount retailers, wholesale clubs, military bases, quick service restaurants and casual dining restaurant all throughout the United States.
Not only this, but it is also a wholesale distributor of Wine distilled spirits and beer in some of the US states.
Company McClain is categorised into three segments:
McLane is organised into three segments:
1. Grocery distribution
Grocery distribution wing serves about 49,000 retail locations.
2. Foodservice distribution
The foodservice distribution category caters to almost 36,500 chain restaurants.
3. Beverage distribution
The beverage distribution section, services around 24,900 retail locations in Colorado and South-Eastern US.
4. Key Customers
Walmart is a former parent company of McLane. It is also McLane’s largest client, with approximately 25% of its total revenues in the year 2017. Other prominent customers include 7-Eleven and Yum! Brands.
Retail chains that receive one or more product categories from McLane include Wal-Mart, Sam’s Club, Walgreens, Pilot / Flying J, Kangaroo Express, Circle K, Wawa, 7-Eleven, ExxonMobil, Target Stores, Love’s, Kmart, Hess, Family Dollar, and AAFES.
Restaurant chains like Taco Bell, KFC, Pizza Hut; the Yum! Brands family of concept and former Yum Concepts Long John Silvers/A&W Restaurants are also supplied by McLane Foodservice.
Examples – Alibaba.com
The World’s Largest E-commerce B2B Marketplace, Alibaba.com, was launched in the year 1999. It is the leading platform for global wholesale trade. Suppliers are connected with buyers across the globe on a single marketplace platform by this international business to the business site.
Suppliers on the site manufacture and sell products in bulk to buyers. The buyers are generally businesses that are looking for the inventory for the company. Alibaba.com brings together hundreds of millions of products in more than 40 different major categories. These categories include electronics, machinery and apparel.
Hundreds of thousands of messages are exchanged between the buyers and suppliers on the platform each day. The buyers of all these products are located in more than 190 countries and regions.
Example – Walmart and its Wholesale Business Model in India
1.B2B Offline Model
- 28 Best Price Modern Wholesale stores are owned and operated by Walmart India.
- The stores of nearly 5000 items in a Cash & Carry wholesale format.
- It also has two fulfilment centres in India. One in Lucknow and the other in Hyderabad.
2.B2B Online Model
- Walmart India is a fully owned subsidiary of Walmart stores Inc.In July 2014 Walmart India set up its B2B e-commerce platform- www.bestpricewholesale.co.in
- This was introduced as a convenient online shopping opportunity for the exclusive members of Best Price Modern Wholesale stores situated in Hyderabad and Lucknow.
- It is set up as a virtual store where this e-commerce platform provides a similar medley of products and special items to its members.
Metro Cash & Carry Model in India
METRO the German brand operates in 35 countries. It employs more than 1,50,000 people worldwide. METRO is a leading international specialist in wholesale and food retail.METRO Cash & Carry is the wholesale division of METRO.
This concept is primarily defined by its unique business model and customer base. The registered business customers visit a Cash & Carry outlet, select the items they need and carry these back themselves.
This saves them the pain of placing orders with multiple vendors. The Indian market was introduced to METRO Cash & Carry in 2003. The brand METRO Wholesale currently has 27 wholesale distribution centres operating under them.
Small retailers, Kirana stores, hotels, restaurants, caterers, corporate’s, SMEs, offices, companies, institutions, and self-employed professionals are the core customers of METRO Cash & Carry. Business customers are registered and provided with a customer registration card. Only business customers are allowed to shop at METRO.