I have always wondered why there are Wholesalers in the first place, for one. And, why won’t they sell direct to the public? Yet, aren’t there some who will sell direct? And if so, how does one go about finding them online?
Yes, there are wholesalers that sell direct to the public. If you specify what you’re trying to purchase, you might be able to get useful recommendations.
The answer is in the name. Wholesalers deal in whole lots, pallets or truck loads. They maybe have a warehouse, maybe not. They don’t want/have a public end user store with all the expense that entails. Costco is sorta close. They buy some pallets of cookies. One pallets is put where you can reach it and gets replaced with another whole pallet once depleted. Costco is not a “public” store though. You have to pay a membership fee to shop there.
And you pay sales tax. If you have a business membership, you’re exempt from sales tax.
Same with Smart & Final
Yep, forgot about that part.
TLDR: Can they sell to the public? Yes. Do they? It depends.
This is going to entirely, 100% depend on the individual wholesaler, and to a certain extent their vendors and their customers.
Some places will, some won’t. The ones that won’t often don’t do it because they’re not interested in selling a few things to random customers, that’s what (regular) stores are for. Also, businesses that buy from them will often get upset about this. Both because they don’t want to deal with ‘regular’ people* but more importantly, it’s hard to sell things for a profit if your customers can buy those items for the same thing you’re paying.
It’s one of the reasons business, like mine, aren’t real thrilled that food service places, like Gordon Food Service have stores that are open to the public. As long as you’re willing to buy at least a full case, you’ll pay the same as what I pay…so why are you going to shop at my store?
Similarly, HVAC supply houses aren’t usually open to the public. They don’t want joe blow replacing his own furnace motor and taking that job away from a furnace repair place. They also don’t want joe blow returning the (now used) motor because he misdiagnosed the problem.
*As an example of that, take Restaurant Depot. Big chain restaurant supply store. It’s not open to the public, however, it’s also not difficult for people to get a hold of a membership card to get in. Going there on a weekend is awful. It’s probably 75% ‘regular’ people. These are people that don’t know what they’re looking for, don’t understand how a store like this works. A common issue is that you’ll have a ‘regular’ person trying to check out with 6 green peppers or a 5# tube of ground beef. Not understanding that these things are only for sale by the case.
And, frankly, the answer to the OP’s question, “why there are Wholesalers in the first place,” is kind of similar to this.
Just as wholesalers may not want to deal with selling small quantities to consumers, manufacturers may not want to deal with selling (relatively) small quantities to individual retailers or contractors.
The wholesaler purchases from manufacturers in large quantities, then resells, in smaller quantities, to their customers (who then resell, in smaller quantities still, to consumers).
Wholesalers also may serve the purposes of reducing the number of suppliers that a retailer has to use for ordering inventory; rather than having to deal with (and purchase from) many manufacturers, the retailer can order much of their inventory from a smaller number of wholesalers.
Thanks, everyone! You all raise good points, and it’s good to know!
Wholesales often (not always, but often) handle distribution as well. If my business can crank out 50,000 widgets a day, we can let a wholesaler figure out the logistics of getting to customers all over the country.
And some won’t even sell to customers that will buy by the case or pallet - because they don’t want to lose all the business from the small chain of ten hardware stores because they sold cases of waterproofing directly to a customer of that chain.
This is the key. Not that they cannot sell to the public (unless they have a specific sort of dealership agreement, someothing I’ve not heard of) just that they move large volumes, and dealing with small quantities, small sums, and a large traffic of customers is not the way they choose to do business. they may however have a small “outlet” office that willl sell small quantities, depending on how much customer service effort is required…
Another point is they deal in a limited selection of product, whereas most retail stores try to carry a variety of product brands from a variety of suppliers to satisfy a wider range of customer demands.
Here in Canada, every business pays GST (Goods and Sales Tax, essentially a VAT). Retailers (or any business) gets to deduct GST paid from GST collected and remit the difference. Some provinces do have a sales tax with the usual trapping of - a retailer who collects the PST has a tax number which exempts them from paying their supplier PST.
Yup, that’s very common and as annoying as it can be, I do understand it.
On the other hand, there’s a workaround. A small/local manufacturer in my area that’s very popular, has a small storefront for random customers (and used to have a number of small retail stores in malls). They sell their products at a considerably high price than the places that buy from them wholesale.
That is, they sell something to us for $10/lb. We retail it at $15/lb. However, if you go into their store, they have it marked $25/lb.
The reason being that they don’t want to undercut all the places selling their stuff. If they do that, they’ll lose all the stores (like mine) who can’t move any product since you’d be able to buy it cheaper by going right to them.
For that same reason, we’ve run into issues with new businesses that don’t have a grasp on that concept yet. We end up having to explain to them that if they sell something in their store (that they also wholesale to us to resell), they either have to give us a discount so we can sell it for about the same price or they have to raise the price in the store to match what I have to sell it for. Otherwise we end up looking like assholes for pricing it so high.
Or, worse yet, switcharoo and try to return the broken part.
I have had this happen where I find who makes the item but won’t sell to the public, usually with reproduction car parts. Most times they are happy to give me a name of one of their distributors.
My current problem involves a car lift I bought used. Would like to replace some of the wear parts. Lift manufacturer will only sell to their wholesale distributors, the distributors won’t sell to me because I am not a commercial account. I have offered to drive to the manufacturer and pick up the parts at the dock, but still the answer is no.
This is part of the fun of dealing directly with the public. One piece at a time…
Not exactly. One must have a valid resale tax exemption certificate, and it’s only valid for things you are going to resell, not for use or consumption in your business.
So if an entity is in the business of reselling produce, they’ll be eligible for exemption on purchases of produce. It doesn’t apply to floor cleaner to mop the floors, or paper for the office printer.
What is a resale certificate and who can use one? | Sales Tax Institute
Not that lots of small businesses don’t abuse the crap out of their resale certificate. And not that lots of ordinary consumers don’t manage to finagle a way to use a resale certificate fraudulently.
Non-profit certificates are another area ripe for abuse.
No doubt.
I remember hearing (sorry, no cite) that sometimes wholesalers can corner a market in an area. I believe this was the case with alcohol wholesaling in Illinois. There was only one wholesaler of alcohol and you simply had to go through them. If you thought to buy your Budweiser from someone else for less money then the wholesaler just cut you off. Now your liquor store can only sell Budweiser. So, instead, you had to play nice with that one wholesaler…or else. Not good for the merchant.
(Or maybe it was they had a lock on selling Budweiser and Miller products which are popular…and ONLY they sell that stuff so the merchant is at the mercy of the wholesaler for an important product they need to stock.)
Yup; Wirtz Corporation (formerly Judge & Dolph) bought up a lot of their competition, and my understanding is that they did dominate the market, especially in the Chicago area.