TYPES OR CLASSIFICATION OF WHOLESALERS.
Wholesalers can be classified into two broad categories, namely: Merchant Wholesalers and Agents Middlemen.
MERCHANT WHOLESALER: The merchant wholesaler buys and re-sells goods on their own account taking title to the products they handle and convey the title directly to those that deal with. They derive profit from the marginal difference between the purchase and selling price. Majority of wholesalers fall into this category.
FUNCTIONS OF MERCHANT WHOLESALERS
They arrange credit terms.
They undertake the storage of goods.
They provide promotional services.
They provide delivery services.
They always provide advisory services.
TYPES OF MERCHANT WHOLESALERS
Specialist Wholesalers: These are wholesalers who restrict their services to a particular trade and area in which they have specialized knowledge. The products they handle require special skill and handling.
Rack Jobbers: Rack Jobbers sell specialized line of merchandise to retail stores and provide certain special services. Rack jobbers servicing supermarkets usually specialize in one or both of two lines – toiletries and housewares.
Cash and Carry Wholesalers: These are present mainly concerned with grocery products. They do not offer credit nor delivery services to the customer. They require retailers to pick their orders, pay cash and carry away their purchase.
Truck Wholesalers: A truck wholesaler combines selling, delivery and collection in one operation. He carries only a limited range of stock, they handle perishable goods. Their ability to makefast and frequent delivery is the main appeal to customers and manufacturers. Examples of goods handled are fish, tomatoes etc.
Drop Shipment: Drop shipments handle the good physically but leave the performance of storage and transportation to the producer whom it represents. The manufacturer ships then directly to the retailer but bills the drop shipper at factory prices.
General Wholesalers: General wholesalers are wholesalers who purchases goods from different producers, store the goods from different producers, store the goods and prepare them for sale to the retailer in small quantities.
AGENT MIDDLEMEN: Agent middlemen are mostly engaged in wholesaling rather than in retailing. They assist in negotiating sales and purchases or both on behalf of their principals. They do not take title to the goods but they receive commission. Agent middlemen are brokers, manufacturer’s agents, auctioneers, commission merchants, selling agents etc.
Brokers: Brokers are agents that link or connect sellers with the buyers without having physical control over the goods involved. They take neither title nor possession of goods. A broker receives commission called brokerage.
Manufacturer’s Agents: Manufacturer’s agents are appointed by the producer to market its product in a particular area. The manufacturer will pay them commission. They are usually engaged in industrial and durable goods.
Auctioneer: Auctioneers are agents who offer goods to prospective buyers through public auction. They sell goods to the highest bidder. Auctioneers deal in unique goods, e.g. art work and houses.
Commission Agent: A commission agent is an agent merchant who buys and sells goods on commission basis on behalf of his principal. He usually exercises physical control and negotiates the terms of sale of goods handled by him.
Factor: A factor does not buy goods nor do they take title but they do take possession and provide warehouse and handling facilities. He also receive commission.
Del-credere Agent: Del-credere is an agent who undertakes or guarantees to indemnify the principal against any loss arising from buyer’s default in payment. He is paid extra commission called del-credere commission.