In a two-level distribution channel, who typically buys from the producer and sells to retailers?

In a two-level distribution channel, who typically buys from the producer and sells to retailers?

• A. Wholesaler
• B. Retailer
• C. Distributor
• D. Consumer

Answer: (A)

A two-level distribution channel uses one intermediary between the producer and the next buyer. The intermediary that buys from the producer and then sells to retailers is the wholesaler. Wholesalers purchase large quantities, store the goods, and break bulk into smaller lots for retailers, making it easier for producers to reach many retailers without handling numerous small orders themselves. This bulk-breaking and distribution function is what links producers with a wide retail network. Retailers, by contrast, sell to consumers, and consumers buy from retailers, so they don’t fit the role described. Distributors can perform similar functions in some industries, but the standard two-level channel emphasizes wholesalers as the link between producers and retailers.

A two-level distribution channel uses one intermediary between the producer and the next buyer. The intermediary that buys from the producer and then sells to retailers is the wholesaler. Wholesalers purchase large quantities, store the goods, and break bulk into smaller lots for retailers, making it easier for producers to reach many retailers without handling numerous small orders themselves. This bulk-breaking and distribution function is what links producers with a wide retail network. Retailers, by contrast, sell to consumers, and consumers buy from retailers, so they don’t fit the role described. Distributors can perform similar functions in some industries, but the standard two-level channel emphasizes wholesalers as the link between producers and retailers.