Merchant wholesalers are intermediaries between manufacturers and retailers. Typically, they purchase bulk quantities of goods from manufacturers and resell them to retailers at a profit.
Merchant wholesalers buy directly from manufacturers and transport the goods to storage facilities, which may be warehouses or yards. These goods are sold in smaller quantities to retailers and often delivered to their premises. Merchant wholesalers profit from these sales by charging higher prices to cover expenses and to create a profit margin. Many retailers prefer purchasing from merchant wholesalers as retailers often lack the necessary budget for bulk buying, administrative staff, transportation and storage facilities. Many manufacturers prefer selling their goods to merchant wholesalers as they too lack the administrative staff, transportation means and storage facilities necessary for supplying retailers. The wholesaler earns an income from being an intermediary between manufacturers and retailers.