Quick Answer: The wholesale industry is made up of businesses that sell goods mainly to other businesses, not to the public. Wholesalers sit between manufacturers and buyers such as retailers, contractors, and institutions. They buy in volume, store stock, ship orders, and often give buyers credit. Many now sell through online B2B stores too.
Most people never deal with a wholesaler, yet almost everything they buy has passed through one. The spare parts in a garage, the cleaning supplies in an office, the produce at a corner shop: someone bought it from the maker in volume, stored it, and sold it on to the business that put it in front of you.
This guide explains how that part of the economy is built. You will see who takes part, the main types of wholesalers, how they make money, what makes the work hard, and where the industry is heading in 2026.
If you want the step-by-step version of a single wholesale order instead, read our beginner’s guide on how wholesale works.
Table of Contents
What Is the Wholesale Industry?
The wholesale industry is the group of businesses that sell goods to other businesses, not to individual shoppers. The U.S. Census Bureau treats wholesaling as a middle step in distribution. Wholesalers sell, or arrange the sale of, goods for resale, equipment used in production, and raw materials and supplies. They normally work from a warehouse or office, not a public shop.
That is wider than the usual “bulk goods at lower prices for retailers” definition. Wholesalers can sell:
- Goods for resale to retailers or other wholesalers. A food distributor supplying grocery stores is a good example.
- Machinery and durable equipment used by other businesses, such as farm machinery or industrial tools. The Census Bureau counts these as wholesale even when they are sold one unit at a time.
- Raw materials and supplies that other businesses use to make their own products.
So the test is the buyer, not the box count. Volume and lower prices are common in wholesale, but they come from how the business works. They are not the definition.
How Does the Wholesale Industry Work?
Goods usually move down a chain: manufacturer, then wholesaler or distributor, then retailer or business buyer, then the end customer. Each step exists because it saves someone else work. A wholesaler collects goods from many makers and passes them to many buyers, in amounts those buyers can actually use.
Here is a simple example. A café supply wholesaler buys paper cups, lids, and takeaway boxes from several factories. It keeps them in one warehouse and delivers to cafés and takeaways across a city every week.
- The factories get a few large, steady orders instead of chasing hundreds of small ones.
- The cafés get one supplier, one invoice, and one delivery, and often some time to pay.
- The wholesaler carries the stock, the storage cost, and the risk that a café pays late.
The chain is not always this straight. Common variations:
- A manufacturer sells directly to large retailers and skips the wholesaler.
- A manufacturer runs its own sales office or branch, away from the factory, to sell to business buyers.
- An agent or broker brings a buyer and a seller together and never owns the goods.
- A wholesaler sells to another wholesaler, for example a national distributor supplying a regional one.
A Short History of Wholesale
Wholesale began with merchants who bought goods in volume and carried them to towns with no direct line to the maker. In the 1800s, steam-powered rail and ships let goods travel much farther, and wholesalers built warehouses near ports and rail lines.
Phone and fax ordering came next, then early computer-to-computer ordering (EDI) and business software (ERP), then online B2B stores. Each step made it easier to connect a seller with a buyer. The latest step, online ordering backed by data and AI, is covered in the technology section below.
What Does a Wholesaler Do?
A wholesaler does six main jobs. Not every wholesaler does all of them, and the mix is what sets one apart from another.
- Buys in volume. Orders from manufacturers in quantities a small retailer could not afford alone.
- Holds stock. Keeps a wide range on the shelf so buyers can get what they need without calling ten factories.
- Breaks bulk. Sells smaller lots than the factory would. Many also sort, pack, and label goods for the buyer.
- Delivers. Combines shipments and runs deliveries, using its own trucks or freight carriers.
- Gives credit. Lets trusted buyers pay later, and takes on the risk that some will not pay.
- Shares market information. It sees orders from many buyers, so it knows what is selling and can tell suppliers and customers.
Main Types of Wholesalers
The Census Bureau draws its main line between merchant wholesalers and agents and brokers. It counts the sales offices and branches that manufacturers run apart from their plants as merchant wholesale establishments, so they sit in the first group.
| Type | Owns the goods? | How it earns | Examples |
|---|---|---|---|
| Merchant wholesaler | Yes | Gap between buying and selling price | Distributors, jobbers, import/export merchants, drop shippers, manufacturers’ own sales branches and offices |
| Agent or broker | No | Commission or fee | Manufacturers’ reps, commission merchants, import/export agents, auction companies, B2B online marketplaces |
Many merchant wholesalers keep their own warehouse, although models such as drop shipping can work without handling the goods. Agents and brokers work from offices and do not handle the goods.
Business models and specialties
Separate from the types above, wholesalers choose how they operate. These are the models you will run into most.
- Specialty wholesalers stock one category in depth, such as restaurant equipment or auto parts. Buyers use them for product knowledge as much as for supply.
- Drop shippers take an order and have the supplier ship it straight to the end customer, so the seller never touches stock. Who pays what, and when, depends on the contract between seller and supplier, so read it before you assume how fees work. Our guide to dropshipping vs wholesale compares the two models.
- Discount and closeout wholesalers sell surplus, returned, refurbished, discontinued, or near-expiry stock at lower prices. The price reflects the condition or age of the stock.
- Online B2B wholesalers sell through their own store or a marketplace, with online catalogs and account-based ordering. More on this in the technology section.
Wholesaler vs Distributor vs Manufacturer vs Retailer
People use these words loosely, and in real life the roles overlap. The table shows how they usually differ.
| Role | Owns the goods? | Typical customer | Main job |
|---|---|---|---|
| Manufacturer | Yes | Distributors, wholesalers, retailers, sometimes business buyers directly | Makes the product |
| Distributor | Usually | Retailers and other businesses | Buys and resells, often for specific brands or territories |
| Wholesaler | Usually | Retailers and business buyers | Buys in volume from many suppliers and resells in smaller lots |
| Agent or broker | No | Buyers and sellers | Arranges the sale for a fee or commission |
| Retailer | Yes | Individual consumers | Sells to the end customer |
The Census Bureau lists distributors as one kind of merchant wholesaler, which is why the two words often mean the same thing in practice. In many industries, a distributor holds the rights to sell a specific brand in a set area. That is usually the difference people have in mind.
Logistics firms are a different case. Freight forwarders and third-party logistics providers move or store goods for others. They are part of the supply chain, but they are not wholesalers unless they also buy and sell the goods.
How Do Wholesale Businesses Make Money?
Money comes in a few ways:
- The resale gap. Buy at one price, sell at a higher one. Per-unit gaps in wholesale are often smaller than in retail, so volume matters.
- Volume and price tiers. Bigger orders get lower unit prices, which pushes buyers to order more per delivery.
- Paid services. Delivery charges, packing or labeling, and in some cases fees for payment plans.
- Commission. Agents and brokers are paid a cut of the deal.
One warning. The resale gap is gross profit. Freight, storage, damaged or returned stock, payment processing fees, labor, duties and taxes where they apply, and unpaid invoices all come out of it.
Two wholesalers selling the same product can end up with very different real margins, depending on the sector, delivery costs, and how much credit risk they carry. That is why we do not quote a standard markup here. Any single range would mislead.
For ways to protect your margin, see how to boost wholesale profit margins.
Wholesale Pricing in Brief
Most wholesalers mix a few pricing methods. This is the short version. For the full list of 20+ methods, read our guide to pricing strategies for wholesalers and distributors.
| Method | Works best when |
|---|---|
| Cost-plus | Your costs are steady and easy to track |
| Volume or tiered | You want bigger orders from each customer |
| Value-based | The product is hard to find elsewhere, or comes with real service value |
| Competitor-based | Buyers compare suppliers and the product is much the same everywhere |
| Dynamic or market-responsive | Costs or demand swing, as with seasonal goods, limited stock, or freight-sensitive products. |
Two terms come up in almost every wholesale deal:
- MOQ (minimum order quantity) is the smallest order a supplier will take, set in units or in order value.
- Payment terms say when the buyer pays: upfront, with a deposit, or on credit such as Net 30 or Net 60, meaning payment is due 30 or 60 days after the invoice.
Both are explained step by step in how wholesale works.
Benefits and Drawbacks of Wholesale
For sellers, the upside:
- Larger orders per sale, so each customer conversation covers more revenue.
- Repeat buyers. Retailers and business customers reorder.
- Easier demand planning once you know your regular accounts.
For sellers, the downside:
- Thinner margin per unit than retail.
- Money tied up in stock and storage.
- Cash flow strain when buyers pay on credit.
- More work around orders, shipping, and account management.
For buyers, the trade is lower unit costs and a wider choice from one supplier, in return for minimum orders and carrying the stock themselves.
Challenges Facing Wholesale Businesses
Most of the pressure comes from a handful of places.
- Cash flow and credit risk. You pay suppliers first and get paid later. A few late-paying accounts can hurt.
- Thin margins. Small per-unit gaps leave little room for freight spikes or price wars.
- Stock planning. Too much stock ties up cash and risks waste. Too little loses orders.
- Freight and delivery costs. Transport costs can change faster than your price list.
- Dependence on a few suppliers. One supplier delay can leave your shelves empty.
- Complex pricing. Different buyers get different prices, tiers, and terms. Keeping them right by hand leads to mistakes.
- Online ordering expectations. Buyers want to see prices and stock and reorder without calling anyone.
- Scattered data. Stock in one system, orders in another, customer history in a spreadsheet.
- Fraud and security. Fake accounts, payment fraud, and data theft target businesses that take online orders and offer credit.
- Cross-border rules. Customs duties, tax rules, and product standards add paperwork when you buy or sell abroad.
How Technology Is Changing Wholesale
Online ordering is no longer a side project for B2B sellers. McKinsey’s 2026 Global B2B Pulse Survey gathered answers from nearly 4,000 decision-makers in 13 countries. It found that 71% of companies offer eCommerce, and among them roughly a third of revenue now flows through digital channels.
Buyers also used an average of ten channels along the way, from sales calls to websites to email. The survey covers B2B companies across many sectors, not only wholesalers, but the direction applies to wholesale too.
Here is how the day-to-day differs:
| Traditional wholesale | Digital wholesale | |
|---|---|---|
| Ordering | Phone, email, rep visits, PDF catalogs | Online catalog, self-service ordering, saved reorders |
| Prices | Price list sent on request | Prices shown to approved buyers after login, set per customer or group |
| New accounts | Paper forms and phone checks | Online registration, then approval |
| Stock information | Call to ask | Stock levels shown at order time |
| Reach | Mostly local or existing accounts | Any buyer you approve, anywhere you can ship |
What this looks like in practice
- B2B ecommerce. Customer accounts, an online catalog, and self-service ordering let buyers place and repeat orders at any hour.
- Pricing automation. Rules apply customer-specific prices, quantity breaks, and tiers at checkout, so staff does not quote by hand.
- Inventory and ERP links. When the store and the stock system share data, buyers see real availability, and the warehouse sees orders as they arrive. It also helps with purchase planning.
- Customer data. Order history shows who has gone quiet, who buys what, and which accounts deserve a call.
- AI and analytics. Used for demand forecasts, spotting pricing problems, and answering routine customer questions. Treat the output as a second opinion. A forecast is only as good as the sales data behind it.
- Omnichannel selling. Buyers move between the website, email, phone, and sales reps. They expect the same price and stock numbers in every one of them.
Wholesale Industry Trends to Watch in 2026
- Online ordering is the baseline. McKinsey’s 2026 findings describe eCommerce and omnichannel selling as the minimum buyers expect, not a way to stand out.
- Buyers mix channels. The same buyer may research on your site, ask a rep a question, and reorder by email. Your prices and stock numbers need to match everywhere.
- Pricing and catalogs tailored per customer. Expect more sellers to show different products, prices, and terms to different accounts.
- More use of AI and personalization. McKinsey links wider performance gaps between B2B companies to personalization, broader use of AI, and tighter sales management.
- Supply-chain resilience. Relying on one supplier per product leaves a wholesaler exposed to delays. Many wholesalers reduce that risk by using more than one supplier, holding safety stock where it makes sense, and getting a clearer view of what their suppliers have in transit.
How WooCommerce Businesses Can Manage Wholesale Online
If your wholesale store runs on WooCommerce, the main problem is keeping wholesale buyers apart from regular shoppers and showing each group the right prices. WooCommerce does not do that on its own, so most stores add a plugin.
Whols is a WooCommerce wholesale plugin built for this. It covers:
- Wholesale registration with an approval step, so you decide who gets wholesale access. See how to approve or auto-approve wholesale registrations.
- Wholesale pricing, including tiers and bulk discounts, set by product, category, or customer role.
- Hidden prices and products for customers who are not wholesale buyers. See how to hide prices and products.
- Bulk order forms for repeat buyers, available in Whols Pro.
Running retail and wholesale on one site? Our guide to a B2B + B2C hybrid WooCommerce store shows how.
Frequently Asked Questions
What is the wholesale industry?
It is the group of businesses that sell goods to other businesses, such as retailers, contractors, and institutions, instead of to the public. Wholesalers buy from manufacturers, hold stock, and deliver in the amounts buyers need. The U.S. Census Bureau also counts agents and brokers who arrange these sales without owning the goods.
How does the wholesale industry work?
Goods usually move from a manufacturer to a wholesaler or distributor, then to a retailer or business buyer, and finally to the end customer. The wholesaler buys in volume, stores the goods, and sells them on in smaller lots, often with delivery and credit. Some products skip steps, for example when a manufacturer sells direct.
What is the difference between a wholesaler and a distributor?
In practice, the terms overlap, and the Census Bureau counts distributors as a kind of merchant wholesaler. Both buy goods and resell them to businesses. A distributor often holds the rights to sell certain brands in a set area, while a wholesaler often carries products from many makers.
How do wholesalers make money?
Mostly from the gap between what they pay suppliers and what they charge buyers, multiplied by volume. Some add fees for delivery, packing, or other services. Agents and brokers earn commissions. The gap is gross profit: freight, storage, returns, payment fees, and unpaid invoices come out of it.
What are the main types of wholesalers?
Merchant wholesalers buy and own the goods they resell. Agents and brokers arrange sales for others and earn a commission. Manufacturers also run their own sales offices. Within those groups, businesses specialize: some focus on one product category, some drop ship, some sell closeout stock, and many now sell online.
How is eCommerce changing the wholesale industry?
Buyers expect to see prices and stock online, place orders themselves, and reorder fast. McKinsey’s 2026 B2B survey found that 71% of companies sell online, and about a third of their revenue comes through digital channels. For wholesalers, customer accounts, pricing rules, and live stock data are now standard needs.
Final Thoughts
A wholesale business runs on a few basics: suppliers you can rely on, stock levels you actually track, prices that cover real costs, dependable delivery, and buyers who want to come back. Technology changes how orders arrive.
It does not change those basics, but it makes them much easier to get right once you have more than a handful of accounts.
If you manage wholesale and retail customers through WooCommerce, a wholesale plugin such as Whols can help automate customer roles, wholesale pricing, registration, and other B2B workflows.