Wholesale Trade

Significant Points

* Most workplaces are small, employing fewer than 20 workers.
* Office and administrative support, sales, and transportation and material moving occupations make up 71 percent of employment in wholesale trade.
* Although some jobs require a college degree, a high school education is sufficient for many jobs.
* Consolidation and new technology should slow employment growth in some occupations, but many new jobs will be created in other occupations.

Nature of the Industry

When consumers purchase goods, they usually buy them from a retail establishment, such as a supermarket, department store, gas station, or Internet site. When businesses, government agencies, or institutions, such as universities or hospitals, need to purchase goods, they normally buy them from wholesale trade establishments. Retail establishments purchase goods for resale to consumers, but other establishments purchase equipment, motor vehicles, office supplies, or any other items for their own use.

Goods and services.

The size and scope of firms in the wholesale trade industry vary greatly. Wholesale trade firms sell any and every type of good. Customers of wholesale trade firms buy goods for use in making other products, as in the case of a bicycle manufacturer that purchases steel tubing, wire cables, and paint. Customers also may purchase items for use in the course of daily operations, as when a corporation buys office furniture, paper clips, or computers. Other customers purchase a wide variety of goods for resale to the public, as does a department store that purchases socks, flatware, or televisions. Wholesalers may offer only a few items for sale, perhaps all made by one manufacturer, or only a narrow range of goods, such as very specialized machine tools. Others may offer thousands of items produced by hundreds of different manufacturers, such as all the supplies necessary to open a new store, including shelving, light fixtures, wallpaper, floor coverings, signs, cash registers, accounting ledgers, and perhaps even some merchandise for resale.

Wholesale trade firms are essential to the economy. They simplify flows of products, payments, and information by acting as intermediaries between the manufacturer and the final customer. They may store goods that neither manufacturers nor retailers can store until consumers require them. In so doing, they fill several roles in the economy. They provide businesses, institutions, and governments a convenient nearby source of goods made by many different manufacturers, which allows them to devote minimal time and resources to transactions. For manufacturers, wholesalers provide a national network of a manageable number of distributors of their goods that allow their products to reach a large number of users. In addition, wholesalers help manufacturers by taking on some marketing, new customer sales contact, order processing, customer service, and technical support work that manufacturers otherwise would have to perform.

Besides selling and moving goods to their customers, some wholesalers may provide other services. These extra service options include the financing of purchases, customer service and technical support, product marketing services such as advertising and promotion, technical or logistical advice, and installation and repair services. After customers buy equipment, such as cash registers, copiers, computer workstations, or various types of industrial machinery, they may need assistance integrating the products into the customer’s workplace. Wholesale trade firms often employ workers to visit customers, install or repair equipment, train users, troubleshoot problems, or provide expertise on how to use the equipment most efficiently.

Industry organization.

There are two main types of wholesalers: Merchant wholesalers and wholesale electronic markets and agents and brokers. Merchant wholesalers generally take title to the goods that they sell; in other words, they buy and sell goods on their own account. The merchant wholesale segment also includes the individual sales offices and sales branches (but not retail stores) of manufacturing and mining enterprises apart from their plants or mines that market their products.

Merchant wholesalers deal in either durable or nondurable goods. Durable goods are new or used items that generally have a normal life expectancy of 3 years or more. Establishments in this part of wholesale trade are engaged in wholesaling goods, such as motor vehicles, furniture, construction materials, machinery and equipment (including household appliances), metals and minerals (except petroleum), sporting goods, toys and hobby goods, recyclable materials, and parts. Nondurable goods are items that generally have a normal life expectancy of less than 3 years. Establishments in this part of wholesale trade are engaged in wholesaling goods, such as paper and paper products, chemicals and chemical products, drugs, textiles and textile products, apparel, footwear, groceries, farm products, petroleum and petroleum products, alcoholic beverages, books, magazines, newspapers, flowers and nursery stock, and tobacco products.

Firms in the wholesale electronic markets and agents and brokers segment arrange for the sale of goods owned by others, generally on a fee or commission basis. They act on behalf of the buyers and sellers of goods, but generally do not take ownership of the goods. This sector includes agents and brokers as well as business-to-business electronic markets that use electronic means, such as the Internet or Electronic Data Interchange (EDI), to facilitate wholesale trade.

Only firms that sell their wares to businesses, institutions, and governments are considered part of wholesale trade. As a marketing ploy, many retailers that sell mostly to the general public present themselves as wholesalers. For example, “wholesale” price clubs, factory outlets, and other organizations are retail establishments, even though they sell their goods to the public at “wholesale” prices.

Source: bls.gov, senukai.lt, integrondirect.com, hptronic.cz, anatoliancarpet.com, amystewart.com, eastagri.org, goskagit.com


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