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Understanding Wholesale Terminology
The wholesale world is a distinct business realm with its unique language and structure. At times, you may come across terms you haven’t heard before and might even feel lost. In this article, we’ll make an effort to share essential insights about wholesale terms and stand by you throughout this journey, guiding you as you progress.
Assortment
The term refers to a specific range of products that wholesalers gather together for their customers. Such as bundles and arrangements.
Backorder
The term refers to orders that cannot be completed immediately due to the stocks not always being up to date.
Big-Box Stores
The term refers to retailers with large warehouses and distribution networks. These retailers can offer a wide range of products thanks to their large network.
Billing Address
The term refers to the address that is used in the order invoices. The address provided in the invoices is generally the retailer’s headquarters address.
Brand
The term refers to a distinct name, logo, symbol, or design that identifies and distinguishes a company’s products from their competitors.
Brick and Mortar
The term refers to stores that have physical locations and buildings. Customers can visit and shop within these stores.
Buy Now, Pay Later (BNPL)
As the name implies, retailers can buy their orders without any front payment. If there will be an interest rate for the products, it should be determined between the wholesaler and the retailer.
Buybacks (Guaranteed Orders)
The term refers to refundable products. Wholesalers can buy their products back from the retailer if they are not able to sell the products.
Case Packs
The term refers to the same products being bundled together in high volume for a convenient logistic procedure that makes life easier for both wholesalers and retailers. Logistics labor costs and operational costs can be reduced through this arrangement.
Catalogue
It is a printed or digital document that wholesalers, especially wholesalers are not very active in the e-commerce field. It typically includes a complete listing of all the wholesaler’s products, often with product codes and/or identifying numbers for an easy ordering process. This catalogue helps salespeople to be able to complete the ordering process.
Chargebacks
The term refers to the cancellation process of unauthorised payments. Buyers can dispute charges, especially when a wholesaler fails to fulfill the order terms decided between the wholesaler and retailer.
Collect on Delivery / Cash on Delivery (COD)
It is a payment method where the retailer pays for the order when the products are delivered by the wholesaler. This way all the delivered products can be controlled by the retailer before making the payment.
Collection
The term refers to the specific products that wholesalers bundle together for specific events, seasons, or special occasions such as Halloween, Ramadan, or Passover.
Consignment
The term refers to a payment agreement between a wholesaler and a retailer. Wholesalers supply the products that the retailer wants to sell in their stores. After delivery is made, retailers start selling the products, after the time frame is decided between the wholesaler and retailer, retailers can refund the unsold stock back to the wholesaler.
Cost of Goods Sold (COGS)
The term refers to the calculation of the cost of a product starting from the production stage to the last store location. This calculation includes all logistics and material costs.
Delivery Window
The term refers to the agreement between wholesaler and retailer about the order’s delivery time.
Direct-to-Consumer (D2C)
The term refers to the wholesalers who make their private labels or special products available to the end users without big order volumes.
Distribution Centre
The term refers to big logistics infrastructures. This infrastructure can contain different types of warehouses among them. Distribution Centers mainly help and support the logistics operation for a faster and bigger distribution network. Wholesalers send their customer’s orders to these locations first to be able to fulfill the Delivery Window agreed with the customer.
Dropshipping
The term refers to sellers placing an order for a specific customer to the wholesaler or the manufacturer. Sellers directly become a bridge between the wholesalers or manufacturers and the buyers. Thanks to this popular practice, sellers do not have to calculate logistics costs or operations. All the operations are being tracked by the wholesalers and manufacturers.
Estimated Time of Arrival (ETA)
The term refers to the estimated time of arrival. Before a retailer places an order with the wholesaler they agree on a specific period for the delivery.
Exclusivity
The term refers to big retailers wanting to be the only retailer in the district supplied by one specific wholesaler. This way, all the operation is directed to one retailer.
Exporter
The term refers to people or companies who bring products outside of the specific region or country.
House Accounts
It is the name given to large retailers with large volumes and frequent orders that cannot be handled by a standard salesperson. Sales and operations are usually monitored and organized by managers or a special unit within the company.
Importer
An importer generally refers to a person, Company, or entity involved in the business of bringing goods or services into a country form another. They usually sell their products to the wholesalers.
In and Out
The term refers to wholesalers placing orders for products that they don’t keep in stock. These products are sent to the retailer immediately after arriving and never become permanent stock in the warehouse.
Inventory
The term refers to the quantity information of the products that a wholesaler keeps in stock in their warehouse.
Invoice
The term refers to a written or digital document that was created by the wholesaler, this document includes information about the retailer, products, costs, and values of the products ordered. It has a unique identification number and is essential for both sales and accounting departments.
Keystone
The term refers to the calculation of the suggested retail price by the wholesaler. Wholesalers generally suggest their retailers charge the products by their double value of the wholesale price.
Lead time
The term refers to the time needed for a wholesaler to deliver their products to a retailer.
Less-than-Truckload (LTL)
The term refers to the shipment of products that are not enough to fill an entire truck during ground transportation.
Line
The term refers to all of the wholesaler products that are ready to sell.
Line Sheet
The term refers to a list of products that the wholesalers prepare so their customers can see the list of the products.
Manufacturer
The term refers to the backbone of the wholesale B2B organization. Manufacturers as the name implies produce products and sell them to the wholesalers.
Manufacturer’s Suggested Retail Price (MSRP)
The term refers to the recommended sale price that manufacturers suggest to the wholesalers.
Margin
The term refers to the difference between production costs and wholesale price of a product.
Markup
The term refers to the percentage between production costs and wholesale price of a product.
Minimum Order Quantity (MOQ)
Minimum Order Quantity (MOQ): The term is used to describe the lowest order quantity that wholesalers offer to their customers to balance logistics costs and profitability, ensuring they do not suffer losses. It can vary from region to region and from retailer to retailer.
Net Payment Terms
The term refers to different payment methods that wholesalers offer to their customers for easier payment options. It mostly refers to 30, 60, or 90 suspense of the payment. Retailers pay the product price after the decided timeframe.
Open-to-Buy
The term refers to the total money to be spent on the products that retailers keep in stock.
Order Minimum
The term refers to the lowest order amount needed for the wholesaler’s customers. This allows wholesalers to adjust their logistics and operational expenses accordingly.
Pick List
The term is used to describe a written or digital document that indicates which products need to be retrieved from the warehouse and sent to the customer for sale.
Point of Sale (POS)
The terminals provided by banks and used by wholesalers to accept payments via bank cards or credit cards.
Pre-order
The term refers to products that are not in stock of the wholesaler ordered by the retailer. Once the wholesaler has the stock of the specific product, they send the products to their customers.
Price Lists
The term refers to special prices for the products arranged for the specific customer. It usually includes special discounts per product for the different retailer sizes.
Private Label
The term is used to describe the process where a retailer or wholesaler partners with another manufacturer to produce the retailer’s or wholesaler’s exclusive brands and products. In this arrangement, the manufacturer handles all the production efforts, while the retailer or wholesaler focuses solely on selling the product.
Pro Forma Invoice
The term refers to a draft invoice created before the delivery. It includes product information, customer information, and order amount. Payments are made upon or after the delivery of the order.
Purchase Order (PO)
A purchase order is a document specifying the desired products, quantities, and agreed-upon currency. When wholesalers create and send this document to their suppliers, the suppliers deliver products on time and at an agreed price to the wholesalers.
Range
The term refers to all of the wholesaler products that are ready to sell. It is similar to the term “Line”.
Recommended Retail Price (RRP)
The term refers to the recommended sale price that wholesalers suggest to the retailers.
Resale Tax ID Number
The term refers to tax exemption for the orders placed by retailers from the USA.
Return and Exchange Policies
The term refers to predetermined rules by the wholesalers about refunds and exchanges.
Return Merchandise Authorization (RMA)
The term refers to predetermined rules and regulations followed by the retailers for refunds and exchange policies.
Sales Representative (Sales Rep or Sales Agent)
The term refers to people who work in the field with customers and help them along the way from start to finish of the order process. They generally can create orders, price lists and offer discounts to the retailers.
Sales Tax
Sales Tax is a type of tax determined based on the cost of retail products. In Europe, it is typically paid by the manufacturer, while in the USA, it is generally paid by the buyers.
Samples
The term refers to products offered to the retailer free of charge to try the products before implementing them in their lines.
Sell-through
The term refers to a specific time frame that a product sell through different sales channels.
Shipping Address
The term is used to refer to the address where the wholesaler will make the delivery.
Shipping Policy
The term refers to a document created by the wholesalers and has similarities to privacy policy and terms and conditions documents. It includes pricing, delivery rules, and estimated time of arrival.
Shipping Window
The term refers to the period decided between the wholesaler and retailers for delivery to take place on a specific date for the placed orders.
Showroom
The term refers to a store where wholesaler display their products for their customers.
Stock-Keeping Unit (SKU)
The term refers to a product-specific code that is kept for stocking and easy logistic operations. SKUs are used to identify products from each other.
Stocklist
The term refers to a written or digital document created by the retailer for an easy ordering process. It includes the products that the wholesalers keep in stock
Ticketing
The term refers to labelling of the information about a product that is in stock.
Trade Show
The term refers to expos and big shows where wholesalers and retailers come together and discuss industry
Vendor Compliance
The written rules and regulations that wholesalers use for the operations and logistics. It includes Terms and Conditions, which means agreements decided between wholesalers and retailers on billing insurance, and accounting matters.
Universal Product Code (UPC)
The term refers to a universal specific code for every product. It is a unique code assigned to all of the products manufactured around the world.
Value Added Tax (VAT)
The term refers to the whole taxation process of the products being paid by the manufacturer, wholesaler, or retailer before reaching the customers. Thanks to this process customers always can be assured that they will pay the price tag values for every product.
Vendor
The term refers to wholesalers that sell their products to retailers.
Wholesale
The term refers to businesses that buy their goods from manufacturers at low prices with high volumes. Wholesalers usually work with retailers except for D2C Wholesalers. D2C wholesaler sell their products directly to their customers.
Year-to-date (YTD)
The term refers to the calculation of sales starting from the first day of the year. All sales and completed orders are added to this calculation.
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