What Is Wholesale? Definition, Types, and Its Role in the Supply Chain
Wholesale means buying goods in bulk and reselling them in smaller lots to retailers or other businesses. Learn the types of wholesalers and their supply chain role.
By Tim Advotics · · Updated · 3 min read
Key takeaways
- Wholesale is the business of buying goods in bulk from manufacturers or distributors and reselling them in smaller quantities to retailers or other businesses.
- Common types: merchant wholesalers (full-service and limited-service), agents and brokers, and manufacturers' sales branches.
- Wholesalers collect and store goods, break bulk, standardize supply, keep availability and prices stable, and share market information.
- Wholesalers compete on stock availability, fulfillment speed, and price — all of which depend on accurate stock and order data.
Wholesale is the business of buying goods in bulk from manufacturers or distributors and reselling them in smaller quantities to retailers or other businesses. The people or companies doing it are called wholesalers. Wholesalers don't sell for final consumption — their customers buy to resell or to use in their own business.
Wholesalers are a key link between manufacturers producing at high volume and the thousands of stores that buy in small quantities.
How are wholesale, distribution, and retail different?
| Aspect | Distributor | Wholesaler | Retailer |
|---|---|---|---|
| Buys from | Manufacturer, under an agreement | Manufacturer or distributor | Wholesaler or distributor |
| Sells to | Wholesalers, stores, business customers | Stores and businesses | End consumers |
| Volume per transaction | Very large | Large (bulk) | Small units |
| Brands carried | Often focused on specific brands | Usually many brands | Many brands |
| Territory | Defined in the agreement | More flexible | Local |
For a full explanation of distributors, see What Is a Distributor?.
What types of wholesalers are there?
Merchant wholesalers
The most common type: wholesalers that buy and own the goods and therefore carry the stock risk. They split into:
- Full-service wholesalers — offer a complete service to their buyers: holding stock, delivery, payment terms, even promotional support.
- Limited-service wholesalers — offer fewer services to keep prices lower, for example:
- Cash-and-carry: buyers come in, pay cash, and take the goods themselves.
- Drop shippers: take orders while the manufacturer ships directly to the buyer.
- Truck wholesalers: sell and deliver straight from the vehicle, like van sales.
- Online wholesalers: take orders through marketplaces or apps.
Agents and brokers
Agents and brokers don't own the goods. They bring buyers and sellers together and earn a commission — common for commodities, chemicals, or products sold under large contracts.
Manufacturers' sales branches
Some manufacturers open their own branches or sales offices to perform the wholesale function in a territory, without intermediaries.
What role do wholesalers play in the supply chain?
- Collecting and storing goods at scale ahead of demand, so retailers always have supply.
- Breaking bulk into quantities that suit each store.
- Standardizing supply — grouping goods by size and quality.
- Keeping availability and prices stable by holding stock when supply is plentiful and releasing it when demand rises.
- Absorbing risk such as demand spikes or damage in storage.
- Sharing market information — buying behavior, purchasing power, and consumer preferences gathered from retailers.
How do wholesalers measure and improve performance?
- Fill rate — how many orders are filled completely from stock. See the formula in What Is Fill Rate?.
- Stock turnover — how quickly inventory sells, so capital isn't tied up in the warehouse.
- Stock accuracy — records matching physical stock, maintained through regular stock taking.
How do digital systems help wholesalers?
Wholesalers serving hundreds of stores struggle to keep up with ledgers and spreadsheets. With Advotics Distribution, orders, stock, deliveries, and invoices connect in one flow, while Advotics Warehouse manages receiving, storage, and picking in the warehouse.
Want to see how it works for your wholesale business? Contact the Advotics team.
Frequently asked questions
What is wholesale?
Wholesale is the business of buying goods in large quantities and reselling them in smaller quantities to retailers, stores, or other businesses — not to end consumers.
What is the difference between a wholesaler and a distributor?
A distributor usually works directly with the manufacturer under an agreement and covers a defined territory. A wholesaler may buy from distributors or manufacturers, typically carries many brands, and serves retailers who visit or order.
What is the difference between wholesale and retail?
Wholesale sells in bulk to businesses for resale, at a lower unit price. Retail sells in small quantities directly to end consumers for their own use.
What are the types of wholesalers?
Merchant wholesalers who buy and own the goods (full-service or limited-service, such as cash-and-carry and drop shippers), agents and brokers who don't own goods and earn commissions, and manufacturers' own sales branches.
