What Is Wholesale Distributor - DSers eCommerce Basics

Wholesale Distributor

A wholesale distributor is a company that purchases large quantities of products from manufacturers to stores and resells them in smaller amounts to retailers.

What Is Wholesale Distributor

A wholesale distributor is a company that purchases large quantities of products from manufacturers to stores and resells them in smaller amounts to retailers. 

In e-commerce, a wholesale distributor refers to a business entity that operates in the online marketplace and specializes in sourcing products from manufacturers or suppliers and selling them in bulk quantities to retailers or other businesses operating in the e-commerce space.

Types of Wholesale Distributor

The type of wholesale distributor that makes the most sense for an e-commerce business will depend on factors. There are a few main types of wholesale distributors:

  • Broadline

These distributors carry an extensive range of products from different categories they sell to retailers. They typically have extensive inventories.

  • Specialty

These distributors focus on selling a narrow range of related products within a specific category or industry. They are more targeted.

  • National

These large distributors operate nationwide and sell to retailers nationwide. They have extensive networks.

  • Regional

These wholesale distributors operate within a specific region or state and sell to retailers within that geographic area.

  • Local

These small wholesale distributors operate within a city or small region and sell to local retailers. They offer personalized service.

  • Wholesale club

Also called cash & carry, these distributors sell large product packs to members at wholesale prices but require them to buy in bulk.

  • Online

These wholesale distributors operate digitally and sell products to retailers via e-commerce platforms and websites.

  • Dropshipping distributors

Dropshipping distributors act as middlemen and fulfill orders for retailers directly from manufacturers without stocking inventory.

Why Is Wholesale Distributor Important

Wholesale distributors serve as indispensable partners for e-commerce businesses. There are a few key reasons why wholesale distributors are important for e-commerce businesses:

  • Expand reach

Wholesale distributors give e-commerce businesses access to their networks of retailers, significantly expanding their potential customer base. This helps drive more sales.

  • Reduce costs

Wholesale distributors can handle logistics, sales, marketing, and other functions for e-commerce businesses, reducing these costs compared to selling directly to retailers.

  • Lessen risk

Wholesale distributors assume inventory and demand risk for e-commerce products, reducing financial risks for e-commerce businesses.

  • Gain retail insights

Wholesale distributors provide valuable insights into the needs and preferences of retailers, helping e-commerce businesses improve their products and strategies.

  • Improve fulfillment

Wholesale distributors can fulfill orders from retailers on behalf of e-commerce businesses, eliminating the need for separate retail order management systems.

  • Build brand exposure

Partnering with distributors exposes e-commerce brands to a broad network of retailers, helping raise awareness, authority, and trust.

  • Offload functions

Wholesale distributors can handle tasks like returns management, value-added services, and financing, reducing operational hassles for e-commerce businesses.

  • Leverage relationships

Wholesale distributors already have established relationships with retailers that e-commerce businesses can tap into for growth opportunities.

  • Offset margins

While distributors take a margin on product sales, the other benefits they provide often outweigh this for e-commerce businesses.

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