Wholesaling

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DEFINITION

The sale and distribution of goods to users other than end consumers. Wholesaling involves selling merchandise to retailers, wholesalers and merchants, or to industrial, commercial and institutional users. A wholesaler can act as a middleman, brokering deals between these businesses. Wholesaling often occurs when large quantities of merchandise are reassembled, sorted, then repackage, and distribute in smaller lots.


In banking, the term wholesaling refers to services that are designed for large, institutional clients, including real estate developers, pension funds and large corporations, as opposed to retail banking which provides services to standard, individual customers. A wholesaler can also be a sponsor of a mutual fund, or act as an underwriter in a new issue.



INVESTOPEDIA EXPLAINS

Wholesaling is one step on the supply chain, which includes various companies like suppliers, manufacturers and retailers. Retailers and other users purchase goods from wholesalers, and then sell the products at a higher price to cover costs and generate profits. Supply chain management (SCM) was developed in the 1980s to address the need to maximize efficiency in the business processes involved in moving goods from original suppliers to end users.


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