When we need something for our house kitchen, we reach out to grocery stores. In the grocery stores, we buy the products in small quantities. But this is not the case with restaurants or big retail outlets. Whenever they need something, they reach out to the food wholesalers where they can buy the goods in bulk quantities. Let us understand the term food wholesalers in depth.
Who Are Food Wholesalers?
Food wholesalers can be any business or an individual that offers food products to the retailers. They distribute the goods in bulk quantities to retailers who then resell it to other customers. The fact to be noted here is, a manufacturer can be a wholesaler if he produces his own chain of products. Most wholesalers only concentrate on selling the products rather than manufacturing it.
Types Of Food Wholesalers
Food wholesalers can be categorized into the following categories:
1. Individual Food Wholesaler
An individual food wholesaler is the person that sells products to the retail outlets. He is the sole owner of the wholesale firm. He could also be a manufacturer also if he has his own range of products.
2. Organizational Food Wholesaler
An organizational food wholesaler is an organization that works with various retail outlets. There lies a slight difference between individual and organizational food wholesalers. An individual is owned under a sole proprietorship whereas an organization is owned under a partnership firm.
3. Industrial Scale Food Wholesaler
Industrial scale food wholesalers are the one that specifically deals with the restaurants, big grocery stores or chains that require products in bulk quantities at wholesale prices.
4. Merchant wholesalers
Merchant food wholesalers are the ones that are used in the FMCG food industry. They are the ones who directly buy from the manufacturers and store the product and then finally sell it to the customer. The loss would be entirely borne by the merchant wholesaler when buying or selling the goods.
5. Specialized food wholesalers
Under this category, we have the wholesalers who sell only specialized items in whole. These wholesalers either manufacture frozen food items which require a lot of processes and elements or they just sell other food items that only work according to the specializations.
Under the wholesale system, price is fixed as per the quantity required. The price is fixed as per the volume required by the other party or the retail outlet. The golden rule of the wholesale system is:
More the quantity, less the price
Less the quantity, more the price.
An opposite relationship exists between the cost and amount.
Merits Of Food Wholesalers
Following are the advantages of the food wholesalers. These are as follows:
1. Convenience To Retailers
Food wholesalers provide a lot of convenience to the retailers. Retailers need not to go here and there in search of vendors. All of the products are available at one place. Various logistic requirements of retailers such as transportation and warehousing etc are also solved by the food wholesalers.
2. Convenience To Producers
Producers are also benefited by the food wholesalers. They get all their large deliveries at their doorstep without any hassle. They too need not to go here and there in search of deliveries. The producers need not worry about transportation costs just like the retailers.
3. Purchasing power
As food wholesalers, one may have a grip or hold when buying from the producers or suppliers. Since, one may supply to multiple retailers, they can buy the goods in bulk and this can give a hit to negotiate advantageous terms or even contract for a customized food product line.
Demerits of food wholesalers
1. Capital intensive
Starting a wholesaling business in the food industry would require a lot of capital investment. Investments like leasing a place, warehousing, inventories, and others would definitely be tough in the beginning. Along with initial capital investment other expenses like keeping the inventory in stock or maintaining the vehicles used for transportation would also require a huge amount of finance.
2. Lower margin
Compared to the retailer, the manufacturer may earn less. So, one will have to start wholesaling more products to earn more profit.
3. Space requirement
As the business is about selling goods in bulk quantities to retailers, storing the inventories would require a lot of space. Not just inventories but parking space for vehicles would also need a huge amount of space. If the space is not enough, it may lead to dysfunctional arrangement of either the inventory or vehicles.
Difference Between Food Wholesalers And Food Distributors
These two terms are often used by the people, but most of them are not clear in their concepts. In reality, these both terms are quite different from each other. A food wholesaler is the one that sells the products to the retailers. On the other hand, a food distributor is the one that deals directly with the food retailers as well as food wholesalers. A food distributor works more closely with the manufacturer whereas the food wholesaler works more closely with the retailer. The primary duty of a wholesaler is to satisfy the needs of the retailers and the goal of the distributor is to satisfy the needs of the manufacturer.
Thus, we all can say that a food wholesaler is the person or organization that acts as a middleman between the retail outlets and manufacturers. By following a proper supply chain it is easy to develop a network and product availability is also at ease.
The bottom line
The food wholesalers can earn a lot of profit once they set up the business and develop relationships with the retailers. Although there are a few difficulties initially like searching for the right place and buying inventory and transportation vehicles. At the same time once it is developed the work can move on smoothly and efficiently. The most important thing is focusing and working hard to set up the business and we hope the article gives you a brief idea about it. For more information, you can just contact Myanmar Golden Heart.