Wholesaling includes all activities involved in selling good and services to those buying for resale or business use.

Why would a producer use wholesalers rather than selling directly to retailers or consumers?  Because wholesalers are better at performing many channel functions.

  Cash-n-carry wholesalers: offer a limited line of fast-moving goods, sell to small retailers for cash, and generally do not deliver.  A small fish store retailer, for example, normally drives at dawn to a cash-n-carry fish wholesaler and buys several crates of fish, pays on the spot, drives the merchandise back to the store, and unloads it.
  Truck jobbers: perform a selling and delivery function.  They carry a limited line of goods (such as milk, bread, eggs, or snack foods) that they sell for cash as they make their rounds of supermarkets, small grocery stores, hospitals, restaurants, factory cafeterias, and hotels.
  Drop shippers: operate in bulk industries such as coal, lumber, and heavy equipment.   They do not carry inventory or handle the product.  Once an order is received, they find a producer who ships the goods directly to the customer.  The drop shipper takes title and risk from the time the order is accepted to the time it is delivered to the customer.
  Rack jobbers: serve grocery and drug retailers, mostly in the area of non-food items.  Rack jobbers send delivery trucks to stores, and the delivery person sets ups racks of toys, paperback books, hardware items, pet supplies, health & beauty aids, and other items.  They price the goods, keep them fresh, and maintain inventory records.  Rack jobbers sell on consignment; they retain title to the goods and bill the retailers only for the goods sold to consumers.
  Producers' cooperatives: owned by farmer-members, they assemble farm produce to sell in local markets.  Profits are divided among members at the end of the year.  They often try to improve product quality and promote a co-op brand, such as Sun Maid Raisins, Sunkist Oranges, or Diamond Walnuts.
  Mail order wholesalers send catalogs to retail, industrial, and institutional customers, offering jewelry, cosmetics, specialty foods, and other small items.  Their main customers are businesses in small, outlying areas. 

  Brokers & Agents: differ from merchant wholesalers in two ways -- (1) they do not take title to goods, and (2) they perform only a few functions.  Their main function is to aid in buying and selling, and for these services they earn a commission on the selling price.  Like merchant wholesalers, they generally specialize by product line or customer type.  They account for 11% of total wholesale volume.

  A broker brings buyers and sellers together and assists in negotiation.  Brokers are paid by the parties hiring them.  They do not carry inventory, get involved in financing, or assume risk.  The most familiar examples are food, real estate, insurance, and securities brokers.
  Agents represent buyers or sellers on a more permanent basis. Selling agents contract to sell a producer's entire output -- either the manufacturer is not interested in doing the selling, or feels unqualified.  The selling agent serves as a sales department and has much influence over prices, terms, and conditions of sale. Manufacturers' representatives handle two or more related lines, with separate formal agreements, from two or more different manufacturers.  They are most often used in lines such as apparel, furniture, and electrical goods.  Purchasing agents generally have long term relationships with buyers.  They make purchases for buyers and often receive, inspect, warehouse, and ship goods to the buyers.  Commission merchants (or houses) are agents that take physical possession of products and negotiate sales.

Manufacturers' Sales Branches & Offices account for about 31% of all wholesale volume.  Manufacturers set up their own sales branches and offices to improve inventory control, selling, and promotion.  Sales branches carry inventory, and are found in industries such as lumber and automotive equipment and parts.  Sales offices do not carry inventory, and are most often found in the dry goods and notion industries.

Wholesalers' reason for existence comes from increasing the efficiency and effectiveness of the entire marketing channel.

The distinction between large retailers and wholesalers will continue to blur, as both channel members perform many of the functions traditionally held by the other.

Trade agreements, such as NAFTA, are providing opportunities for wholesalers to expand their operations into global markets.