Bulk-breaking is the division of larger product quantities into smaller quantities as products get closer to the final market.
Further Discussion and Bulk-Breaking Example:
Bulk-breaking may include several levels in the channel. What this means is that wholesalers may sell small quantities to other wholesalers or sell directly to retailers. Retailers may continue breaking bulk as they sell individual items to their customers.
As an example, Costco, a U.S. wholesaler and club store, purchases products in large quantities, or in larger bulk. They, in-turn, break their bulk to sell to individuals or retailers. The retailers then break bulk by selling to individual customers. For example, if Costco purchases pallets of chewing gum, they will then sell smaller boxes of packaged gum to a retailer, who will, in-turn, sell the individual gum package from the smaller boxes, to individuals.