Last updated: What is wholesale distribution: Definition, examples, benefits

What is wholesale distribution: Definition, examples, benefits

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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.

The wholesale distribution industry acts as a vital link in the global supply chain and is responsible for distributing the majority of products between business partners around the world. As of December 2020, there were 5.68 million people employed in the wholesale distribution industry in the United States, representing 3.6% of the total private employees in the country.

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.

What is wholesale distribution: Breaking down the lexicon

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:

  1. Wholesaler
  2. Distributor
  3. Supply house
  4. Importer/exporter
  5. Master distributor
  6. Buying/selling group
  7. Trading companies

Wholesale distribution channels and benefits

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.

What is wholesale distribution: Examples 

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.

The four major subsegments of the wholesale distribution industry include:

  • Food and beverage
  • Healthcare
  • High-tech
  • Industrial

Here are examples of wholesale distribution companies across each major subsegment:

  1. Food and beverage distribution: Brakes Bros. is the leading B2B wholesale foodservice supplier in the UK and the catering and food suppliers of choice for thousands of chefs in the catering industry.
  2. Healthcare distribution: Founded in 1833, McKesson Corporation is the oldest and largest healthcare company in the United States. It partners with biopharma companies, healthcare providers, pharmacies, manufacturers, foundations, and governments to deliver medicines, medical supplies, and healthcare services to the patients who need them, when they need them.
  3. High-tech distribution: Insight was founded in 1988 as a global technology solutions provider. Today, they offer IT solutions and services to state, local and federal government, healthcare, higher education, K-12 education, along with other major global corporations.
  4. Industrial distribution: Productos Metalúrgicos S.A. (PROMESA) has been a leading distributor of tools, hardware, and automotive products in Ecuador since its founding in 1962.

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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