The wholesale distribution business is one where goods are bought in bulk from manufacturers and sold at cheaper prices to retailers who typically repackage the goods at smaller quantities to sell to the customers.
The distribution and wholesaling business share certain similarities and hence it may be difficult to separate the two though both of them deal with goods directly from the manufacturer.
The wholesale distribution business merges the operations of the distributor and wholesaler and involves the sourcing of goods from the manufacturer and packaging of the goods for distribution to various retailers who will then sell to the customer.
How to Run a Wholesale Distribution Business?
The wholesale distribution business includes dealings between the business customers who are the retailers as opposed to the general customers and therefore you must understand the various needs of the retailers and the overall customer to sell. To be able to successfully run a wholesale distribution business, there are key factors that you should consider:
Identify a Product to Sell
this will involve a lot of research on the current trends and the needs of your target market. Identifying a product will allow you to focus on goods that will earn you profits.
Since there are a variety of products you can sell, settling on a particular one is important as it pays to be well conversant with what you are selling.
Perform a Cost Analysis
This will mean contacting different manufacturers of the product you want to distribute and compare costs so that you can easily settle on the best manufacturer to supply your products.
Find Manufacturers and Suppliers
This is an important step in the wholesale distribution business as the manufacturer provides the product for you to sell. Finding a good supplier of products will help you run your business efficiently.
Get a Warehouse for Storing Your Goods
When looking for a warehouse to ensure that it is at a location that is safe and easily accessible to clients. If you will be shipping the products, ensure that the warehouse is large enough to enable the running of the operations.
Market Your Products
Marketing is key in any business as it allows you to grow a customer base for your business. There are several ways to market products online and you need to search on the best way that works for you and your business.
When choosing your marketing strategy ensures that you have identified your target clients and use a strategy that will make them attracted to your business. The marketing strategy you use should enable you to gain new clients to help your business grow.
Wholesale Distribution Trends
As the world progresses, the way of doing business also changes to catch up with the new trends. The wholesale distribution business is among the businesses that are embracing the emerging trends and in 2020 the shift to majorly online business is expected especially due to the COVID-19 pandemic which has affected how people interact and how businesses operate. Some of the trends that have been witnessed in 2020 include:
- The eCommerce sector is one of the fastest-growing industries in the world. Most businesses are shifting their models from the traditional brick and mortar business and transferring their businesses to online platforms. The rise in popularity of eCommerce is a result of the increased internet connectivity around the world and the availability of mobile phones which makes transacting businesses online easy and efficient.
- The wholesale distribution channels will change from multiple channels of operation to a single channel that consists of a variety of sales and marketing channels to enable the customer to get a single commerce experience. This will mean that the customers will only look for streamlined services from one wholesaler as opposed to sourcing out different channels for services.
- The wholesale distribution business will also expand to tap into a wide global market. This will be made possible by improved cross-border trade and integrated marketing strategies to include a wider selection of consumers.
- The inventory management and shipping processes will be more transparent and this will be made possible by the implementation of new technologies in the management of inventory. The wholesale distribution business will also be more data-driven which will result in improved consumer experience.
- The wholesale distribution business will also automate a lot of its services. This will enable the businesses to manage their operations more effectively which will result in reduced operational costs and hence more profits.
- The supply chains will be more refined and this will mean that some businesses will relocate to countries that offer manageable tariffs. Businesses will also be able to diversify into markets that have readily available goods.
- More focus will be put on efficient warehouse management practices to allow for the distribution process to be conducted seamlessly.
COVID-19 has greatly affected how businesses are conducted throughout the world and as the countries are slowly opening up after months of lockdowns and closed air spaces the wholesale distribution business is slowly picking pace.
The pandemic has steadily increased the speed at which the online market place was rising and more people have been forced to turn their businesses online to survive the changing landscape.
More people are concerned with the hygiene practices that are used by suppliers in handling their products and so marketing has shifted to ensure that the concerns of the customers are addressed.
The pandemic has also led to reduced production of goods due to companies being forced to have a small number of workers, which has led to less supply.
The wholesale distribution companies have also had to contend with dead stock as the seasons have changed leading to a change in trends and most wholesale distributors will have to come up with ways to efficiently get rid of their old stock.
Benefits of Starting Wholesale Distribution Business
Wholesale distributors usually act as an interface that links the producers of products to the wider market. Wholesale distributors can link a variety of retailers to products which makes the business of buying and selling of goods more efficient.
Some of the other benefits of wholesale distribution business include:
- It connects retailers to a variety of goods at cheaper prices than they can sell to customers at a profit.
- The wholesale distribution provides wide access to goods by supplying to a wide geographical network.
- Wholesale distribution reduces the number of manufacturer/producer contacts that a retailer needs by acting as a one-stop-shop for a wide range of products.
- Wholesale distribution enables the efficient supply of goods that allows the customers to have ready access to goods.
- The business is also profitable as the wholesaler will only source on-trend products and those that sell easily. This is because the wholesalers have the option of sourcing for goods that they can easily sell from a list of their preferred suppliers.
- The wholesale distribution business is efficient as instead of supplying one product to a variety of retailers, the business allows for you to supply a variety of products to a wide range of clients making the chances of making profits higher.
FAQs about Wholesale and Distribution
What is wholesale distribution?
This is a business model where a business buys goods in bulk and stores the products in a warehouse for distribution to various retailers. It incorporates both the wholesaling and distribution model in one.
How does wholesale distribution work?
Wholesale distribution is a business model where the wholesale distributes or ships goods to the retailer or may offer dropshipping services and ship the products directly to the customer if the retailer requires such services.
How do I find a wholesale distributor?
Since most of the operations have shifted online, it is possible to browse through a wide selection of wholesalers who are available in different online directories and find one that suits your business.
Is wholesale distribution profitable?
For any business to be profitable you have to have done thorough research on the products that you can sell to make profits and use proper marketing strategies to gain more clients.
Why wholesale distribution?
Wholesale distribution is an integration of both wholesaling and distribution and this will allow for your business to be more streamlined and offer an all in one approach to business.
There is no clearly defined line to the wholesale distribution business, this makes it hard to separate this model to that of either wholesale or distribution.
The concept of wholesale distribution incorporates the function of both the wholesaler and distributor making the wholesale distribution business a more streamlined and efficient model of business.
The wholesale distribution business reduces the hassle of having retailers flock into your warehouse for goods and also makes the clearing of stock relatively easier as instead of holding on to goods for the retailer, the wholesale distribution model enables you to ship products to either the retailers or the customer directly.