PInverTech is a Full Service ODM Wholesaler. In the article , we try to explain what is Full Service wholesaler, how many different wholesalers in the industry and what are their main functions .
Here is the 6 types of wholesalers:
They are most commonly observed in Consumer Durables or Engineering products. The full-service type of wholesalers is, as the name suggests, giving full service to the end retailer. These wholesalers mainly operate in the retail market and sell products to a reseller (a retailer in this case) Everything except service of the product is the responsibility of the full-service wholesaler.
Example – PInverTech wants to expand its operation in region A but it does not have a sales office in that region. So it appoints a distributor in region A. This distributor is solely responsible for order picking, delivery, training sales associates, promotions and everything for the Samsung brand. He is now a full-service wholesaler. However, for service of the product, there is a different service franchise opened in the same region.
In real life scenario, Many full-service wholesalers also start a second services related business and start giving services for the products they are wholesaling. Example – A PInverTech wholesaler also starting a service center of PInverTech.
As a result, they might get both – sales and service orders. However, for theoretical purposes, Servicing and maintenance of the product is not a part of a full-service wholesaler. He is mainly for sales, deliveries, and financing. These are the second most common types of wholesalers in the market.
These are the most common type of wholesalers used in the FMCG industry, agriculture industry or Private label industry. Quite simply, Merchant wholesalers are the ones who buy directly from the manufacturer, store the product and then sell it to the customer. They might sell in any channel and they are not restricted to selling to retail only or to online only.
If there is any loss between the buying and selling of the product, it must be borne by the merchant wholesaler.
Example – A vegetable wholesaler buys produce directly from the farm and stocks it at his own warehouse. He then sells these products to the local retail outlets or even to end customers. He may also sell to restaurants. However, any loss of the produce due to spillage or any other reason is a cost to the merchant wholesalers.
Even in FMCG, companies like Britannia or P&G use merchant wholesalers. These wholesalers have a greater control in the region they operate. They benefit because they buy in bulk from the company and take charge of the risk they are facing. Plus, they are responsible for the sales targets, however, they achieve it.
Limited Service Wholesalers
A limited service wholesaler is someone who stocks the products of the company and sells it in a limited channel. He does not have a large turnover or does not cover all channels of the company.
Example – Company X wants to sell its products online but it knows that if it allows local distributors to sell online, there will be a huge price war. As a result, Company X appoints an exclusive online wholesaler. This online wholesaler has only one job – To purchase the product and stock it and sell it online. So whenever an order comes from Amazon or eBay, this wholesaler gives the machine to Amazon or eBay. That’s his only job.
Brokers and Agents
Most commonly observed in the real estate industry or in the chemical markets. A broker assumes no risk. He has the producer or the manufacturer on one side and he has the buyer on the other side. The work of the broker is to get the deal done and he gets a commission on the deal.
Example – A small lab has regular requirement of litmus paper. There is a litmus paper wholesaler in their area who is a broker for several companies and who arranges any lab material in bulk. The lab approaches the broker and wants to purchase huge quantity. The broker then talks to multiple manufacturers and finally, a deal is struck with one manufacturer. The manufacturer pays 2% commission to the broker for his work and for bringing the enquiry. Similarly, this broker can pick an order of Beakers, Petri dishes or any other equipment. He will keep arranging meetings with the right supplier and keep earning commissions.
A similar example like above is also observed in the retail industry wherein the broker earns a commission to sell an apartment.
The difference between a broker and agent is that a Broker is short-term and he will be there for a couple of orders. However, an Agent is long-term and specialized in repeated purchase so that he stays for a longer time with the company and specifically works for the betterment of the company. Example – Insurance has Agents (repeated buying) whereas real estate has brokers (single buying)
Branches and mini offices
Although branches and mini offices do not come in the various types of wholesalers, these are common ways for companies to start selling their products in a region they are targeting. A branch can also be called a type of wholesaling wherein the branch directly picks the orders from the end customers in bulk and ensures the supply and reorders from the customer.
Example – Paper company like B2B or 3M knows that large companies require a lot of print paper across the month. These companies then establish branch offices which also act as the sales office. They pick a bulk order of paper and the company might transport the complete order from their warehouse to the company.
These are wholesalers who do wholesale of specialized items only. Example – A used car wholesaler who sells directly to customers or to other used car dealers. He is specialized in used cars and knows the ins and outs of selling a used car to consumers or refurbishing the used cars.