Goods and services are in demand every single day. But let us not deny the fact that all these products don’t come easily even though it is just a click away for you. There is a huge process behind it which is known as wholesale distribution. Certain companies take up the responsibility of distribution of various goods and services. They also make sure to distribute it to different parts of the world.
Wholesalers have a major effect on prices from a cost standpoint. Inventory prices, sales force wages, rent costs, and promotional costs are all examples of wholesaler operating costs. The costs and income of wholesalers are determined by inventory turnover, the monetary value of goods, the functions performed, and performance, among other factors.
In this article, we will be talking about the meaning of wholesale distribution and the process of how it works. So enjoy the article with a cup of coffee or tea and understand the several aspects of distribution.
What is wholesale distribution?
Wholesale distribution is collecting the products in bulk and then supplying the same to different locations. The process is conducted by wholesale distributors that buy products from companies in large quantities. They buy it directly from manufacturers and redistribute the products, most commonly to retailers. The 3 pillars of the supply chain are manufacturer, wholesale distributor, and retailer. Manufacturer is the one that makes the products while distributors purchase these products from the manufacturers in bulk and at low cost and distribute them to the next link in the chain that is usually a retailer. The retailer then sells the products directly to the consumers.
How does it work?
After understanding the meaning, let us move on to the next concept of how wholesale distribution works. Wholesale distributor is the middleman between the manufacturer and the retailer. Some wholesalers that use drop shipping will ship the items directly to the customers as directed by the drop-shipping seller. Other wholesalers are associated with the manufacturer under the same company. And some distributors are in a partnership with the manufacturers.
The idea behind wholesale distribution is buying high demand products at low price. After all that is how the distributors make money. Low prices can be attained but the volume has to be high. By buying the products in bulk, distributors can usually get a great deal from the manufacturers. In many cases, manufacturers do not have the resources to sell a lot of products. Rather than investing the money, time, and effort, manufacturers can reach out to wholesale distributors. Thereby, they can give them a good price and sell the products in large quantities at once.
Wholesale distributors are aware of the process of selling goods to retailers for a slightly higher price and keep the difference as a profit. Therefore, you will find wholesale distributors in furniture, electronics, office equipment, clothing, and groceries.
Who would need wholesale distributors?
In many cases, distributors are used almost exclusively by retailers who need to purchase products in large quantities to fill the shelves of their stores. This business plan is still going strong today, but a wholesale distributor’s role has been extended. It has been rendered extremely important especially in the digital age.
Some wholesalers have taken the opportunity to sell directly to the customers themselves. After all, it is a powerful position to be in when one can sell their products at wholesale and still make profit. The consumers get to enjoy additional savings by purchasing directly from the wholesaler and distributors. In addition, they are able to raise prices slightly higher to maintain the profit level.
One thing that has been popular over the years is drop-shipping. It is a great way to utilize the low prices that are offered by wholesalers. The drop-shippers generally operate online like the retailers and they partner with wholesalers. They do so because this gives them access to great bulk deals on products.
Retailers need to purchase their products, but drop shippers do not have to do the same. They do not keep an inventory on hand that they sell. Whenever a customer places an order, the drop shipper will send the order to the distributor. The distributor will then process the order and they are responsible for shipping it out to the customer.
For anyone who is selling online, all you need to do is locate a wholesale distributor to provide you with the products you want to sell. The first step is to make money online and find the right distributor for your business. The process is quite easy as there are a number of wholesalers online today.
Types of wholesalers
After understanding the process of distribution, the next thing is to understand how many types of wholesalers are involved in it.The wholesale distributors that are involved in this process are given below-
- Merchant wholesalers
- Retail wholesalers
- Limited service wholesalers
- Brokers and agents
- Specialized wholesalers
All of them ensure that the entire process goes smoothly and concisely.
The bottom line
In conclusion, the process of distribution takes place within the supply chain. Therefore, one has to understand every single concept and make things clear in their mind. One has to ensure that they read this article and more such articles and look for tutorials that are available on the internet if they are looking to start their own business in the distribution field.
Being a manufacturer one has to understand that they find the right distributors to continue the entire process of distribution. They need to do a thorough research for the same and find the perfect trading firm.
One such company is MGH that is a global distribution company consisting of more than 1800 employees and working since 1992. The vision of the company is to build, support, and cultivate cultures in order to make a better place. They are working hard every single day to provide the best quality products and services to the employees. So if you are a retailer or manufacturer looking for an apt distribution company, MGH will be the right choice for you.