Which of the following is NOT a limited function merchant wholesaler?
A. A truck wholesaler
B. A general-line wholesaler
C. A rack jobber
D. A drop-shipper
E. A catalog wholesaler
The correct answer and explanation is :
Correct Answer: B. A general-line wholesaler
Explanation:
Wholesalers are categorized based on the range of services they offer. They fall into two broad categories: full-service wholesalers and limited-function (or limited-service) wholesalers.
Full-Service vs. Limited-Function Wholesalers
- Full-service wholesalers offer a wide range of services such as maintaining inventory, providing credit, delivering goods, assisting with marketing, and providing product information.
- Limited-function wholesalers, on the other hand, offer fewer services. They often focus on specific distribution functions, such as transportation, storage, or order fulfillment, and do not typically offer marketing or financing support.
Types of Limited-Function Wholesalers
- Truck Wholesaler: Also known as “wagon jobbers,” they sell and deliver directly from their trucks. They focus mainly on distribution and may not maintain a warehouse or provide credit or extensive inventory services. Common for perishable goods.
- Rack Jobber: These wholesalers manage display racks in retail stores. They maintain ownership of the products until sold and often restock merchandise themselves, particularly in non-food items like magazines or cosmetics. Their function is specialized, making them limited-function wholesalers.
- Drop Shipper: They take title to goods but do not physically handle them. Products are shipped directly from the manufacturer to the customer. They facilitate sales without managing inventory, making them classic examples of limited-function wholesalers.
- Catalog Wholesaler: Operates primarily through mail or online catalogs, selling products directly to retailers without maintaining a physical salesforce. Their limited interaction and support classify them as limited-function.
General-Line Wholesaler – Why It’s NOT a Limited-Function Wholesaler
A general-line wholesaler offers a broad assortment of products, often within a specific category (e.g., groceries, hardware). These wholesalers provide full services, including:
- Credit
- Delivery
- Product advice
- Inventory support
Because they offer comprehensive services across a broad product line, general-line wholesalers are full-service wholesalers, not limited-function.
Conclusion:
Answer B. A general-line wholesaler is not a limited-function merchant wholesaler because it provides a full range of services, unlike the other options listed.