A company involved in the business of wholesale purchases products in bulk quantity from manufacturers and then stores the products in a warehouse. At some point later in time, the company resells those products to retailers, making the wholesale entity a type of ‘middleman’ between manufacturers and retailers. A company involved in the business of distribution is in charge of getting products from wholesaler and distributing them to retailers or customers. Distribution, then, can be considered the ‘middleman’ between wholesaler and retailer.

Wholesale Distribution Software

Is Wholesale Distribution Software necessary?

Accordingly, a company in the business of wholesale distribution performs both wholesaler and distributor duties. In this way, the middleman is eliminated and the business earns greater profits. Wholesale distributors buy products from the manufacturer or other source, then move them from their warehouses to companies that either want to resell the products to end users or to use them in their own operations.

According to U.S. Industry and Trade Outlook, wholesale trade includes establishments that sell products to retailers, merchants, contractors and/or industrial, institutional and commercial users. Wholesale distribution establishments can import and / or sell both durable goods (furniture, industrial supplies, and other goods that can be used repeatedly) and nondurable goods (printing and writing paper, groceries, chemicals, and periodicals).

The traditional definition of a wholesale distribution market is one where goods are sold at a profit, like retailers. The only difference is that the operation takes place in a business-to-business realm; the sales are made to retail companies and other wholesale firms, and not to the buying public. Companies like Sam's Club and BJ's Warehouse, however, have been using warehouse membership clubs for years. These memberships work like ‘stores’ where consumers are able to buy a variety of goods at what appear to be wholesale prices.

There is money to be made in wholesale distribution. Total U.S. wholesale distributor sales are approximately three trillion dollars. Since 1987, wholesale distributors' share of U.S. private industry gross domestic product (GDP) has remained steady at seven percent. Some segments, like the grocery and food-service areas make up thirteen percent of the total while the furniture and home furnishings areas comprise two percent of the total, or forty-nine billion in revenues.

The field of wholesale distribution is a true buying and selling operation. The idea is to buy the product at a low price, then re-sell it making a profit by adding on a dollar amount that still makes the deal attractive to customers. To properly manage and perform these disparate sets of duties, a company needs to have more capital money, bigger warehouses, up-to-date transportation service, greater manpower, and –most of all- superbly specific warehouse distribution software.

According to experts, hundreds of new wholesale distribution businesses are started every year, mostly by people previously in retail. Some make it and some do not. To a large extent, this outcome can be determined by the owners’ ability to transition from a customer service - sales orientation to the operational process of managing a very complex business…a transition that will be made much easier with the use of appropriate wholesale distribution software.

Written by :

tracey boxer