What it means
In everyday trade, a jobber is a middleman who buys large quantities from manufacturers or importers and sells smaller quantities to shops and other businesses. The jobber takes on the work of storing the goods, breaking up bulk shipments and extending credit to small buyers.
In return, the jobber keeps a margin between what was paid and what is charged. The more famous use is in stock markets.
Before the London Stock Exchange reforms of the mid-1980s, jobbers were market makers who held stocks on their own account and quoted two prices: one at which they would buy and one at which they would sell. They dealt only with brokers, who acted for the public, and this split was known as single capacity.
The jobber's income came from the "turn", the difference between the buying and selling price. If a jobber quoted a share at $50.00 to buy and $50.40 to sell, the $0.40 gap paid for the risk of holding the stock and for providing a ready market.
That function is now performed by market makers and electronic trading firms. The idea matters because it shows what liquidity (the ease of buying or selling quickly without moving the price) costs.
Someone has to be willing to hold inventory when the market is quiet, and they need to be paid for the risk of prices moving against them. A wide gap between buying and selling prices tells you that a market is thin, risky or costly to use.
The term can sound negative. In some places jobber is used loosely for a person who does piecework or small contract jobs, and in older American usage it was sometimes applied to small, speculative traders.
Always check which meaning is intended before relying on the word in a contract or a report. For managers, the wholesale meaning is the more practical one.
Using a jobber means you pay a higher unit price than you would buying direct from the maker, but you save on minimum order sizes, storage and delivery. Whether that trade-off pays depends on how much cash you can tie up in stock.
In practice
Real-world examples.
Example
A hardware retailer in a small town orders pallets of mixed fixings from a wholesale jobber instead of buying directly from five different factories. The jobber delivers weekly and allows 30 days to pay, which suits the shop's cash flow. The retailer pays a little more per box but avoids carrying large stocks.
Example
A student of financial history reads about the old London market. Brokers would walk across the floor and ask a jobber for a two-way price, then deal at whichever side suited their client. The student sees how the jobber's quoted gap funded the market's liquidity.
Example
A fashion importer sells container loads of clothing to jobbers at a discount. The jobbers then split the shipment into smaller lots for boutiques in several cities. The importer gets paid quickly and the boutiques get a wide choice without large minimum orders.
Formula
Calculation
Jobber's turn = (Selling price - Buying price) x Number of shares traded
Suppose a jobber quotes a share at $50.00 to buy and $50.40 to sell. Over a day, brokers sell 10,000 shares to the jobber and buy 10,000 shares from the jobber.
Gross turn per share = $50.40 - $50.00 = $0.40
Jobber's turn = $0.40 x 10,000 = $4,000
The jobber earns $4,000 before costs, which pays for the risk of holding shares while prices move and for the office, staff and capital that the business needs.Case study
Seen in the real world.
This is an illustrative story about a fictional company. Harlow and Pike, an invented wholesale jobber, supplied kitchenware to about 300 small shops. It bought full container loads from factories overseas and sold boxes of 12 or 24 items to its customers.
The owner, Imran, noticed that margins were shrinking because customers were paying late and stock was sitting in the warehouse for months. He calculated that each $100,000 of unsold stock tied up cash that could otherwise earn money or reduce borrowing.
Imran tightened credit terms to 30 days, introduced a small discount for early payment and cut slow-moving lines. Within a year the business held less stock, collected cash faster and still served its loyal retailers, which shows that a jobber's profit depends as much on managing inventory and credit as on the headline margin.
Watch out
Common mistakes.
- Assuming a jobber and a broker do the same thing. A broker acts for a client and earns a commission, while a jobber trades on its own account and earns a margin.
- Treating the jobber's margin as pure profit. It must cover storage, financing, insurance, damaged goods and bad debts.
- Believing jobbers still exist on stock exchanges in their old form. Today the role is largely filled by market makers and electronic trading firms.
Questions
People also ask.
What is a jobber's turn?
It is the difference between the price at which a jobber buys and the price at which it sells, which is the jobber's main source of income.
Is a jobber the same as a wholesaler?
In the goods trade, the two words overlap, although a jobber often deals in mixed or smaller lots and may serve smaller retailers.
Why did the jobber system end in London?
Reforms in the mid-1980s allowed firms to act as both broker and market maker, and electronic trading made the old separation unnecessary.
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