A wholesaler is an entity in the supply chain dedicated to the function of wholesaling, which may also be referred to as distributing.
This is a sales activity in which products are sold to retailers, industrial users, or to other wholesalers. Under wholesaling, the product is transferred to an entity that is not the actual consumer. Wholesalers can repack goods or assemble products before distributing them to resellers. They can break down bulk and distribute them in smaller portions.
Wholesalers, which normally have large warehouses for storage purposes, help both manufacturers and retailers save space. Retailers are not usually able to allocate space for storage, as the only space available is that for the display of products for sale. On the other hand, manufacturers need to cut on storage space costs and maximize what they have for actual production and operations. As such, wholesalers facilitate a smooth flow of goods in the supply chain.
Wholesalers source the products from the manufacturer in bulk, then resell them to retailers at profit. However, it is also possible for wholesalers to make their products available to actual consumers and create a retail branch. This presents an advantage to consumers, especially those who prefer purchasing items in bulk, as products are usually offered at lower costs than in regular stores.
This scenario is true for wholesale supermarkets, which often require shoppers to pay a membership fee. Other types of wholesalers may choose to sell products to institutions, such as schools or offices. They can provide necessary supplies in bulk, which would cost more of they were purchased from a retailer.