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Business Model Of Wholesale Distributors

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Table of Content


Who is a wholesale distributor?

What are distributors?

Various Wholesale distributors

What is the Wholesale Business Model?

Wholesale Business Model’s Functions

Wholesale Business Model’s Benefits

Tips for wholesale distribution business model

Successful Model for a Wholesale Business

The Bottom Line

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With so many different vocations and services now available to people, the world has greatly advanced. One such industry is the delivery of goods and services in big quantities. The term “wholesale distribution” is used. This post is for you if you are thinking about working in this industry or want to learn more about “what are distributors” and “wholesale distribution”.

We will talk about the many types of participants in this process in this blog, as well as the model that most people employ. As a result, carefully study the articles and acquire all the necessary information.

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Who is a wholesale distributor?

The person who directs the course of wholesale appropriation is known as the wholesale distributors. They are organizations that circulate items from makers to retailers or clients. A discount seller is a go between who is responsible for conveying monstrous wholesale shipments straightforwardly to retailers or shoppers. They don’t take part in the little everyday individual exchanges that a retail location would. The wholesalers rather center around disseminating items in huge amounts in mass shipments. They are normally the main organizations that participate in direct exchanges with makers. They additionally buy items at their wholesale cost straightforwardly from the actual makers.

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Various wholesale distributors

The various varieties of wholesale distributors are our next topic. So they are divided up into three unique groups which consist of:

Merchant wholesalers 

The most widely recognized kind of wholesalers comprises dealer wholesalers. They are wholesalers who purchase straightforwardly from the maker. Then, move the item to one of their distribution centers and afterward offer it to retailers or straightforwardly to clients. The discount activity accompanies its own gamble. For example, the distributor will be unable to empty the item completely or at a cost sufficiently high to justify its procurement in any case. The distributor bears every one of the misfortunes that might happen in this present circumstance.

Agents, brokers, and commission merchants 

The next category includes agents, brokers, and commission sellers that serve manufacturers and manufacturers who do not have an internal sales team by identifying retailers and other customers who buy products. their products. These types of wholesalers charge a commission on purchases paid to them by the supplier, usually as a percentage of total sales. Unlike merchant wholesalers, agents, brokers and commission sellers are not liable for any loss incurred during the sale of the product at a sufficiently high profit. The manufacturer of the goods contracted with the trader must bear all the losses.

Manufacturers and producers

The final category consists of manufacturers and producers involved in the wholesale process. They are big enough to afford to run their own sales team. They often sell their products to retailers and other customers. Some of them even have e-commerce platforms. This eliminates middlemen. This allows you to achieve higher margins on your products and make profits in the long run.

One of the oldest business models in the B2B field is the wholesale model. In a typical product supply chain, products from raw material suppliers pass through manufacturers, distributors and/or wholesalers, retailers, and finally end users. Each of these organizations represents a particular business model.

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What is the Wholesale Business Model?

The wholesale business model incorporates middlemen who, very infrequently, offer things to consumers directly from manufacturers. As a result, retailers market and sell modest quantities of items instead of wholesalers. On the other hand, they will provide cheaper products to the retail enterprises in large quantities. The store will pay less per unit when they purchase larger numbers. The transport, separation, storage, and sale of the items that will subsequently be offered to clients are the responsibility of wholesalers, who act as mediators between producers and consumers.

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Wholesale Business Model’s Functions

  • Supplying things in large numbers and in a range;
  • Ensuring adequate geographic coverage;
  • Strict specifications for resold goods, from dimensions to product quality;
  • Being an efficient conduit between producers and retailers;
  • Supplying shops with adequate, efficient transportation at reasonable rates.
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Wholesale Business Model’s Benefits

Save cash

A wholesaler will work with multiple suppliers, allowing them to evaluate pricing and get the best deal, allowing them to increase their profit margin when reselling the products. Also, as they will buy large volumes from producers, they may get nice discounts.

Collaboration with Suppliers

A wholesaler will receive the goods on time, at a reasonable price, and of good quality if it develops a solid and reliable connection with its suppliers.

Understanding of marketing

Because the wholesaler will interact with both manufacturers and retailers (and, in some situations, even customers), it will be able to launch and upsell new items earlier because it will have a better and quicker awareness of market wants and trends.

Specialized knowledge

The wholesaler is familiar with the ins and outs of the market, knows which suppliers to trust, and understands how the supply chain should be timed and structured. Customers will therefore see it as an authority.

Simple Expansion

The wholesaler’s familiarity with the market and sector will also enable it to recognise the linkages and chances that others might overlook. Once it has forged alliances with both its suppliers and customers, it will be simpler for it to cross-sell and upsell.

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Tips for wholesale distribution business model

1. Hire the right people

Although it might seem like a no-brainer recommendation, too many firms frequently neglect to invest enough time in the hiring process. Some of the most crucial business decisions you’ll ever make involve hiring. To properly benchmark each new position and evaluate candidates, make sure to compare them to the benchmark rather than one another.

Additionally, stay away from questions that “coach” the candidate to the correct response and instead concentrate on behavioral inquiries using expressions like “Think of a time when…,” which will offer you a better understanding of how the candidate will respond to various circumstances. Check out this post by special guest blogger Nancy Bleeke, President of Sales Pro Insider, for additional information about employing sales representatives in particular.

2. Stop writing and managing orders manually

Inefficiencies in order writing were identified as wholesale distributors’ top order writing problem in a recent survey. There are still far too many wholesale wholesalers processing orders on dated clipboards and paper order forms. Some have made a half-step toward technology by employing Excel spreadsheets and PDF order forms, but these processes are just as labor-intensive as paper, if not more so.

Because mobile technology is so prevalent in our lives today, many prosperous wholesale distribution companies are utilizing it to provide sales agents with access to customer data, product catalogs, and an order writing interface directly on their smartphone or tablet.

3. Get control of your inventories

If you don’t have a firm grasp on inventory management, it’s impossible to operate a lucrative B2B wholesale distribution company. In some businesses’ warehouses, minimum stock levels are maintained, and once those levels are reached, new stock is replenished. Others maintain safety stock levels of specific products to guard against unanticipated surges in demand, while still others employ a “Immediately in Time” inventory approach, sending out orders just before production or shipping.

The key to choosing the best inventory management solutions for your company is keeping track of incoming and exiting goods, performing routine physical inventory counts, and adjusting your inventory levels to changes in demand.

4. Give your salespeople the tools they need to be successful

Are your sales representatives prepared for their sales appointments? Wholesalers, manufacturers, and distributors who are thinking ahead recognize that sales representatives nowadays must provide value to their sales dialogues in order to close deals rather than merely jotting down reorders as a formality. And you already know “what are distributors?” and “Who are the distributors?”

Businesses are providing sales representatives with quick access to crucial data, like client order histories, the most popular products, and stock levels for each product. In order to save sales representatives’ time from memorizing information or looking up pricing. They are now providing them with digital catalogs that already include customer-specific pricing. They can instead focus on selling, which is what they are actually there to accomplish.

5. Make your difference via customer service, not price

However today’s market for wholesale distributors is very competitive. In the belief that lower pricing (and profits) will result in a bigger number of sales, many companies attempt to differentiate their brands based on price. Long-term growth, however, cannot be achieved with this strategy.

Instead, businesses who can distinguish their brands through superior customer service are reaping the benefits. Consider how you may give your customers a contemporary, practical experience. How can you expedite order fulfillment while adding strategic value in place of transactional activity? Get a full assistant on any kind of query from Myanmar Golden Heart.

6. Control your financial flow at all times

Any wholesale distribution company depends on cash flow to survive. Giving their clients too much credit is one of the biggest blunders a wholesale distributor can do. Make sure not to give in to requests for longer payment terms, and be rigorous in recovering receivables. Accept credit cards, send invoices and receive payments online, and, if necessary, outsource collection.

It’s crucial to constantly be mindful of your financial situation. Create routine flash reports with data on cash availability, daily, weekly, and YTD sales, payables, important inventories, best- and worst-selling items, etc.

7. Invest in B2B eCommerce right now

This one is quite significant. In a recent report, IT consulting behemoth Accenture found that 86% of top B2B companies already give their customers the option to order online. Just 14% aren’t.

Customers’ expectations of availability around-the-clock in the workplace are rising. As they become accustomed to the convenience of online ordering in their personal lives as consumers. Businesses that can embrace omnichannel strategies (by enabling clients to place orders through the sales representative, online, or on a mobile device) are already reaping benefits. 

8. Prioritize effective sales territory management

Making sure that your sales representatives are investing the proper amount of time in the appropriate accounts is the main goal of territory management. Many wholesale distributors fail to track sales success, segment consumers properly, and enhance sales prospecting techniques. Hence the customer segmentation strategies and comprehensive plans developed by successful brands are ultimately in line with the corporate goals.

9. Expedite the completion of orders

This year’s poll revealed that 68% of participants can deliver orders from the field to the back office in less than 24 hours. 30% of people could finish it in under 1 hour. 47% of respondents said that items were actually sent within 24 hours when it came to delivery. Creating a definite standard for the rest of the industry to follow.

Today’s wholesale distributors need to digitize the order drafting and submission process to be more successful and efficient. So if you are selling through numerous channels, including field sales and a B2B eCommerce portal. Be careful to aggregate those orders for speedier fulfillment.

10. Establish long-lasting connections

At the end of the day, your capacity to establish solid, long-lasting relationships with your clients is what will determine your success as a wholesale distributor. You’ll be well on your approach to developing a large clientele of return clients by prioritizing customer service, adding value during sales interactions, and expediting order fulfillment.

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Successful Model for a Wholesale Business

As you may have noticed, any wholesaler’s success depends on their ability to establish solid relationships with both suppliers and retailers in order for their company to be long-term viable. Today’s market demands more to do that than just offering outstanding prices and timing. Qualified customer service, effective supply chain procedures, and modernized methods are crucial. For more related information you can just simply reach out to Myanmar Golden Heart, we will brief you on the basics like “What are distributors?” or “Who are the distributors?” and “wholesale vs distribution”. 

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The bottom line

In conclusion, wholesale distribution appears to be a time-consuming operation. It may be challenging, but it is not insurmountable. However you may start your own distribution business with ease if you have the necessary tools and a solid plan. Myanmar Golden Heart, a multinational distribution company with over 1800 workers and distribution in 18 countries, is a well-known example of the same. The business makes sure that its goods are of the highest caliber and delivered to customers in the most moral way possible. It is based in Singapore and has been offering different products and services to people all around the world since 1992. 

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