Wholesale and Distribution
The wholesale industry is composed of many different types of companies that act as a link between producers and end customers. The core processes of a distributor include purchasing, inventory, sales, delivery, and retail. There are many different ways for a distributor to serve the end customer, ranging from companies with a mix of design, stock, and retail to those focused on shipping and value-added service. Challenges for these types of companies may vary significantly, but they still share a basic set of mandates in order to operate effectively in the supply chain, including remaining responsive to changing customer demands, and operating efficiently in order to capitalize on what are typically narrow margins.
Wholesale companies take risks by holding inventory in order to have products available when their customers need them. As a result, distributors are sensitive to trends, price fluctuations and economic turmoil, and they must have the means to respond quickly to market changes. What’s more, the wholesale industry has become increasingly competitive, with many other factors affecting the growth and sustainability of distributors, including:
- Increased globalization has led to significant changes in the flow of products, with more and more products being sourced in low-cost countries and shipped to local markets.
- As manufacturers offshore production to developing countries, their distributors must follow, faced with international growth in order to continue their role in the supply chain.
- Increased incomes in developing countries have has broadened global purchasing power and opened up opportunities for wholesalers and retailers to enter new markets.
- The increased availability of goods and services via internet has transformed the value chain, opening up a realm of new ways for consumers to price and find products and suppliers.