What Is a Wholesale Dealer?
The wholesale trade sector plays an important part in the American economy. Growth in the wholesale sector affects the nation's gross domestic product (GDP). Wholesale dealers sell the products to retail stores that consumers then purchase from those stores.
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Retail
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Retail trade represented 6.2 percent of GDP in 2008. When consumers want to buy a product, such as groceries, clothing, furniture, appliances or electronics, they usually head to a local retail store or order what they want online from a retail outlet. A retail store charges customers a markup on the products to cover what it paid for the product, plus overhead and profit for the retail store's owners.
Wholesale
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Wholesale trade represented 5.7 percent of GDP in 2008. Changes in business demand and in consumer demand for goods affects both the wholesale and retail sectors. Wholesale distributors, or dealers, buy large quantities of products from manufacturers and sell products directly to retail stores. Wholesale dealers also sell products at an amount that earns them a profit. A wholesale dealer is a business selling a product to a retail business, which then sells that product to the consumer.
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Misconceptions
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Although warehouse clubs, such as Sam's Club and Costco, claim to sell wholesale directly to consumers, those places do not truly function as wholesale dealers. Warehouse clubs purchase the products they sell from a wholesale dealer.
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References
- Photo Credit consumer girl image by Lev Dolgatshjov from Fotolia.com
