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Specialty-line wholesalers deal in very few products but with high specialization in their chosen product line(s), such as only dealing in pharmaceuticals.
Full-service wholesalers provide
widest range of services, such as quantity breakdowns, financial assistance and credit, marketing services and product availability. Full-service wholesalers usually earn a higher profit margin than other wholesalers, but operating expenses are much higher as well.
Limited service wholesalers specialize in fewer functions than Full-service wholesalers, generally allowing
producer or
customer to provide most functions. These wholesalers include Cash-and-carry companies, Trucking companies, Drop-shippers or Mail-order firms. Limited service wholesalers take title to products but usually do not provide many of
services a Full-service wholesaler does, like marketing, retailer site selection or personnel training. Due to
limited nature of their services, they have lower operating costs but are also limited to lower profit margins as well.
Wholesalers, in order to keep their operating expenses down, often deal only with companies or with clients able to meet minimum orders, whether monetary or by item count. This can make things difficult on a small business or sole proprietorship looking to reduce cost-of-goods-sold. However, there are many wholesalers or wholesaler-like companies that cater to smaller-volume customers. This is where companies like Costco or Wal-mart's Sam's Club come in--as Costco and Sam's Club are not technically wholesalers, but direct-retailers with lower operating costs, buying in smaller bulk volumes from a company that uses this business plan is often a viable compromise between
lower rates but logistical issues of a standard wholesaler, and
lower profit margins of buying from a retailer, and may make all
difference to a small company operating on a shoestring.
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About the Author
William King is the director of Wholesale-Pages UK: http://www.wholesalepages.co.uk and Wholesale-Canada: http://www.wholesale-canada.com. He has 18 years of experience in the marketing and trading industries and has been helping retailers, entrepreneurs and startups with their product sourcing and promotion, and supply chain requirements.