Merchant wholesalers can be classified in full-service wholesaler and limited service wholesaler: Full-service wholesaler can be classified into three types and limited service wholesalers can be classified into five types.
1. Full-service Wholesaler
Full-service wholesalers perform all the functions of a wholesaler. They provide various services to customers. They buy and sell goods, divide them, make arrangements of transportation and warehouse, make arrangement of finance, provide credit facility, bear risk, help in promotional activities, collect market information etc. They provide different facilities to both producers and retailers.
Full-service merchandise wholesalers can be divided in three classes as follows:
i. General Merchandise Wholesaler
General merchandise wholesaler deals in various kinds of goods. This type of wholesaler purchases medicines, construction materials, perishable and non-perishable foodstuffs, cosmetics, clothes, sports and electrical goods, furniture, etc. stores and sells them. Such wholesalers could be found more in the initial stage of development of marketing. But nowadays, this type of wholesaler can be found rarely in this stage of growing specialization.
ii. Limited-line Wholesaler
Limited-line wholesaler deals in the good of only certain product line. Foodstuff product line wholesaler deals in foodstuffs, tea, coffee, cooking oil, caned fruits, fishes etc. The wholesaler who deals in electrical goods sells bulbs, tubes, wire, holders, heaters etc. General merchandise wholesaler deals in various types of goods of all product lines, while the limited line wholesaler deals in only goods of certain line. But we can find similarity in the services provided by both types of wholesalers.
iii. Specialty Wholesaler
Specialty wholesaler deals in only one special goods of particular product line. The wholesaler who deals in only oil, or electrical goods, or medicines, or so on can fulfill the special needs of customers. Specialty wholesaler can deal in only the product of certain producer. This type of wholesaler can provide high-level technical advice and services to both producer and customers. So, nowadays, popularity of this type of wholesaler is increasing.
2. Limited Service Wholesaler
Limited service wholesaler is such a merchant wholesaler who takes rights and ownership of goods. But he performs only some selected functions of those that are generally performed by a wholesaler. This type of wholesaler does not perform all the functions like a full service wholesaler. Limited service wholesaler performs only some limited functions, which can fulfill special needs.
Limited service wholesalers can be divided into cash and carry wholesaler, truck wholesaler, rack jobber, drop shipper, mail-order wholesaler etc.
i. Cash-and-carry Wholesaler
Cash and carry wholesalers are such a limited service wholesalers who neither sell goods on credit to customers, nor provide transport facility. Retailers and other customers go to their warehouse of cash and carry wholesalers taking means of transportation by themselves, load the goods they want and pay cash to the wholesalers. Mostly, such intermediaries deal in limited product line of goods, e.g. foodstuffs, construction materials, electrical goods, office supplies etc.
ii. Truck Wholesaler
Truck wholesalers provide transportation facility for carrying goods to the customers for inspection and selection. Generally, such wholesalers use a certain regular route and give facilities to retailers or customers to determine their needs. These type of middlemen sell goods in small quantity. They make arrangement of transportation of goods for customers on their own ownership. Truck wholesalers sell perishable goods such as fruits, fish, vegetables etc. to small food stores. Such wholesalers also sell chips, tobacco made goods, etc. They play an important role in markets. The main feature of truck wholesalers is to provide limited services for hand cash. Their warehouse is truck itself.
iii. Rack Jobbers
Rack jobbers are those wholesalers who buy and keep stock of goods for retailers. They don't have their own warehouse. They carry goods by their own means of transportation, fill in retailers' racks, display them, even they keep inventory/record of stick goods of retailers. Retailer's job is to provide place for goods. Rack jobbers also take back unsold goods. Retailers sell such goods. Rack jobbers supply goods such as dolls, foodstuffs, medicines and other goods of short life cycle. Rack jobbers bear risk of producers and retailers by supplying to customers. Because of the rack jobbers' service, retailers do not have to bother about purchasing of goods or about unsold goods.
Also Read:
iv. Drop Shipper
Drop shipper wholesalers take ownership of goods, sign sales contract but they do not take responsibility for physical transportation or delivery. They receive order from industrial users, other wholesalers and retailers for large amount of goods. They order producers for necessary volume of goods. Then the producers directly send goods to customers. Drop shippers take right and ownership of goods. Physical stock of goods remains with the producer or in public warehouse. Such wholesalers help in exchanges through sales activities. They may or may not provide credit facility but they do not transport goods.
v. Mail-order Wholesalers
Mail-order wholesalers sell goods to retailers, industrial users and institutional customers on the basis of the catalog sent to them through mail. The customers study the catalogues and send order for necessary goods. Then wholesalers supply demanded goods to them through mail. As the mail order wholesalers occupy a nominal place of the entire wholesaling, it is taken to be separate class due to its unique features. Generally, mail order wholesalers sell cosmetics, special goods, motor parts, etc. to retailers and other customers through mail. They also sell light consumer goods in small quantity through mail.