Looking at the Manufacturer and Wholesaler Relationship

In a business to business transaction we are not always talking about a sale of one business to another in the general sense.  Instead a business to business transaction can refer to a relationship between a manufacturer and a wholesaler or the distributor to the retailer.  Below we are going to look at the manufacturer and wholesaler relationship as it pertains to advancing your business.

Wholesaler and distributor can be used interchangeably.  Basically the two terms mean this is the company who obtains products to sell to retail locations.  The wholesaler is the one dealing with the retail end of things.  It is their job to ensure that the product the manufacturer creates is being sold.  The wholesaler can find clients to sell the products to or be approached by a business looking to make a deal for selling the products the distributor has.  In a later article we will look at the wholesaler and retailer relationship.

A wholesaler can decide what products they are going to represent.  Typically the business owner will set up a company that is able to ship or bring items to their clients.  The wholesaler generally looks for a couple of things from the manufacturer.

• The products must be quality
• The products must have a market to sell to
• The manufacturer needs a distributor
• The manufacturer must be able to fill the orders
• The manufacturer must be willing to deal.

The first thing a wholesaler looks for is pretty obvious.  The product needs to have quality that reflects the retail price.  A low quality product will be difficult to sell and therefore the wholesaler will not want to deal with it.  On the same line the manufacturer has to be willing to make a good deal for the wholesaler.  The wholesaler that is independent from the manufacturer typically has to buy the products they sell.  So they need to get it at a great cost in order to make a profit when they sell to the retail locations.  Too high a cost will make it impossible for the wholesaler to make their business profitable.

Some manufacturers may already have a few wholesalers.  In this case they may not be willing to work with another company.  On the other hand if you can provide a market as the wholesaler in an area no one else is reaching you have the opportunity to make a deal.

The last item to discuss is the orders.  The manufacturer needs to be able to fill any orders that the wholesaler has.  If a hundred thousand products of one item are orders the manufacturer has to have the facility to create them in a timely manner.  The relationship between wholesaler and manufacturer is a symbiotic one.  For one to succeed the other needs to be there succeeding as well.  Both companies help each other out and make the business work.  One or both businesses can terminate the agreement they have if it is not working.