Wholesalers play an important role in the sale of merchandise and goods to retailers and are the vital link between manufacturers and retailers. They also allow certain business buyers to purchase in bulk when they might not otherwise be able to buy such items. Wholesalers are distinguished in the respect that they concentrate on the redistribution of products to other organisations such as professional, commercial, industrial and indeed, other wholesalers. They may also play the role of a broker or agent in buying or selling products for companies. Wholesalers frequently undertake the physical assembly of large lots of goods whilst also grading, sorting and repacking these into smaller lots for distribution.

The importance of wholesalers lies with the services they offer retailers. Retailers can often not purchase directly from suppliers due to the large minimum order requirements or may suffer when bigger competitors are able to buy at better prices due to greater purchasing power i.e. they can buy larger quantities and pay a better price. Because wholesalers sell to a large range of buyers they can purchase in large quantities and pass down the lower prices that they paid the suppliers, thus offering a vital service for smaller retailers in particular. Wholesalers also benefit the suppliers by opening up other markets opportunities for the suppliers themselves, as wholesalers allow a wider range of smaller retailers to stock the supplier’s products and expand the market.

The emergence of the internet in the last couple of decades has meant that independent retailers and sellers can sell more easily than ever before and communicate directly with suppliers. Thus eliminating the need for wholesalers. However, wholesalers are still a vital link and provide an important service to the retailers of today. The internet has also led to a large increase in the number of people selling items on the internet; using techniques such as drop-shipping (where retailers do not keep stock, but transfer orders directly to manufacturers) which has soared in popularity. Some wholesalers have sites near supplier factories so that they can offer drop-shipping services.

However, Traditional wholesalers still have much to offer in the internet age and have some advantages over drop shipping:

1. Drop-shipping means you are entirely dependent on the supplier or the drop-shipper to ship orders for you promptly rather than having control over this if you held stock which was purchased from a wholesaler. It may not be as easy to resolve issues with drop-shippers about delivery for example. Because the responsibility for customer service lies with the retailer this could be problematic.

2. There is a greater degree of control over orders with wholesalers. Wholesalers are aware of what levels of stock they carry and therefore how much they can sell. And can ensure a prompt shipping of products. With drop-shipping there is potential for retailers to receive money and orders and find that the drop-shipper does not have stock for that item.

3. Because wholesalers purchase such large orders, they are able to secure prices with suppliers that are more competitive than drop-shippers are able to.