Many people have a hard time trying to distinguish what the difference between a manufacturer and a wholesale company is explains Aron Govil.
In order to answer this question, we must first define a few terms before getting into the differences between manufacturers and wholesalers.
Manufacturer:
A manufacturer is any company which designs, makes, builds or produces something (mechanical parts, electronics, furniture etc.) for resale. The product may be made within one company or through sub-contracting to outside companies. Sometimes these sub-contractors are foreign-based companies where labor costs are cheaper than domestically based firms which make up part of our manufactured goods trade deficit problem (see below). But because all phases of production take place within the same company it’s considered a manufacturer.
Wholesaler:
Wholesalers are companies which buy and sell their products to retailers (stores, warehouses etc.) and/or directly to the end-user (consumers). They do not make or produce anything; they buy their goods from somewhere else for resale says Aron Govil. That is the only difference between a manufacturer and wholesaler; one makes while the other buys.
What is manufacturing?
Manufacturing (2nd definition) – The process of producing goods on a large scale by machines driven by power sources such as electricity or steam. Also manufacturing can refer to handcrafting an item in your home workshop with tools like lathes, drills, sanders etc., for example making jewelry in your basement using basic tools for carving, polishing etc.
What is Wholesaling?
Wholesaling (2nd definition) – the buying and selling of goods in large quantities to merchants, retailers or other wholesalers rather than to individual consumers. In other words purchasing a product from a manufacturer in bulk quantities to sell it in bulk quantities again to retail outlets or directly to consumers for a profit.
Basically a manufacturer turns raw materials into finished products while a wholesaler never actually touches the product but only acts as an agent between the producer and the end user reseller. There are exceptions though; some small companies do both manufacturing and wholesaling at the same time by making certain parts within their company then selling them as finished goods wholesale. These companies are called jobbers and are a part of the supply chain.
Manufacturing vs wholesaling: The 3 Largest Types of Manufacturing Companies
There are three major types of manufacturers in the United States. Each type has its own unique characteristics which separate it from one another.
Let’s take a look at each to see how they differ from each other.
1) Industrial Manufacturers –
These companies produce large quantities of industrial-type products used by other businesses rather than consumers such as equipment, machinery, tools, vehicle parts etc. They usually have a huge work force and/or a very large production capacity with multiple locations nationwide. Some examples would be Caterpillar Inc., Deere & Company, and General Electric etc.
2) Electronic Manufacturers –
These companies produce high tech items such as computer hardware and peripherals like monitors, display devices, circuit boards etc. Some examples would be Apple Inc., IBM Corporation, and Samsung Electronics etc.
3) Consumer-based Manufacturers –
Companies which manufacture products for direct consumption by the ultimate end user (you and me). These items are typically used in day to day life: clothes, shoes, furniture, appliances etc. Just about anything you can purchase off the rack and use at home or elsewhere would fall into this category of manufacturers explains Aron Govil. Some examples would be Nike Inc., Under Armor Inc., and Mattel Inc. etc.
What is manufacturing? What is Wholesaling?
Manufacturing is turning raw materials into finished goods with the use of power tools and machines. While wholesaling is the buying and selling of goods in large quantities to merchants, retailers or other wholesalers rather than to individual consumers.
Conclusion:
Manufacturing and wholesaling are two separate parts of the supply chain says Aron Govil. In most cases manufacturers make goods while wholesalers only buy or sell them for a profit. Some companies do both by making certain products within their company then selling them wholesale to retailers as finished goods.
Manufacturing is the process of turning raw materials into finished goods. Wholesaling is purchasing a product from a manufacturer in bulk quantities. To sell it at wholesale prices again to retail outlets or directly to consumers for a profit.