A wholesaler is a market intermediary who purchases PRODUCTs from manufacturers and then distributes them to retailers. Wholesalers act as an alternative to manufacturer or retailer-owned DISTRIBUTION CHANNELs. Wholesalers have existed as long as trade has existed. While today many firms are using the INTERNET to increase their direct communications and transactions with customers, wholesalers continue to be an important part of the U.S. economy. In 1997 wholesalers’ sales in the United States equaled $4.2 trillion. Wholesalers exist because they provide two primary benefits: ECONOMIES OF SCALE in distribution and transactions economies. For many small manufacturers, the cost of establishing and maintaining a distribution system would be prohibitive. Just the cost of selling to retailers for a small firm could make the venture unprofitable. Wholesalers contact many retailers to sell a variety of products, also creating assortments to meet retailers’ needs; maintaining inventories; handling order taking and fulfillment, transportation, and information to both manufacturers and retailers; and sometimes providing financing. In addition to economies of scale, wholesalers provide transactions economies, efficiency in communication and selling between manufacturers and retailers. For example, in a market with six manufacturers and six retailers, if each manufacturer attempts to directly interact with each retailer, there will be a total of 36 (6 × 6) marketing interactions. If, instead, the manufacturers sell to a wholesaler who then markets to each retailer, there will be 12 transactions. In many international markets, wholesalers have considerable market power, determining which products gain access to retail markets. U.S. companies that expand abroad often develop cooperative relationships with existing wholesale networks in their target countries.