What is wholesale distribution? By definition, wholesale distributors buy products from manufacturers or suppliers in large quantities and sell them at wholesale prices to customers, which are often commercial establishments, business professionals, or retail stores.
After a tumultuous couple years, what trends can wholesale distributors expect now? Watch for continued supply chain disruption, increased competition, and a talent shortage.
Distributors come in all shapes and sizes. From Top 10 Forbes companies to small businesses, there are several millions of distributors in existence today.
Let’s discuss what the wholesale distribution is, the industry, and how to identify a wholesale distribution company.
Most of us are all familiar with the term wholesale and definition: The sale of products to retailers, industrial, commercial, institutional, or other professional business users. In general, it’s the sale of goods to anyone other than a standard consumer.
Of course, language can get confusing, so here’s a rundown of other common names for wholesale distributors:
Wholesale distributors hold strong relationships both upstream and downstream of the supply chain.
Upstream, distributors hold relationships with their suppliers, which are often the manufacturers of the products that they warehouse and distribute. Distributors typically buy items in bulk from manufacturers and suppliers, break down large quantities of goods, store the goods in a distribution center, and finally sell and distribute the goods downstream to various businesses, contractors, hospitals, restaurants, and retail stores at wholesale prices.
Wholesale distributors will generally offer a catalog consisting of a wide range of diverse product lines along with customer service.
Many also offer services to become a value-added distributor (VAD). This extends a distributor’s role beyond simply picking, packing, and shipping products by offering differentiating services and solutions that provide additional benefits to their clients. Examples of value-added services include kitting, installation, service, and maintenance of the goods sold.
Distributors often specialize in a product, industry category, or subsegment. Each subsegment has its own challenges, regulatory requirements, and operational nuances, but they all face the same market pressures.
Cost management is a top wholesale distributor challenge. How can distributors streamline management of the cost of goods sold (COGS)?
The four major subsegments of the wholesale distribution industry include:
Here are examples of wholesale distribution companies across each major subsegment:
2020 wholesale distribution trends focus on B2B buyers and winning key moments where front-office connectivity delivers outstanding customer experiences.
As you can see, wholesale distribution is a thriving, multi-faceted industry. Check back here for future posts where we’ll examine wholesale distribution’s role in the global supply chain and the challenges distributors face.
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