When looking for a source of wholesale merchandise, you might have heard of a wholesale distributor but be unfamiliar with the term. Here we look at what wholesale distributors do and how they differ from other wholesale sources.
What Are Wholesale Distributors?
A wholesale distributor buys wholesale merchandise from a manufacturer and sells these goods to other wholesalers, retailers and ecommerce businesses.
Size Of The Wholesale Distribution Market
The size of the wholesale distribution industry in the United States is huge, with an estimated 408,000 establishments (both single-location companies and multi-location companies). These establishments generate about $8.7 trillion of combined annual sales.
Advantages Of Dealing With Wholesale Distributors
There are several advantages to dealing with a wholesale distributor including:
Continuous Access To Products
Wholesale distributors have access to large quantities of merchandise direct from the manufacturer. This continuous access to product is no guarantee from a smaller supplier, who may struggle to consistently supply the exact products you need in the quantities that you need.
A Guarantee of the Source
When you buy merchandise from an accredited distributor, you are buying merchandise sourced directly from the manufacturer.
Continual Contracts at Favorable Rates
As wholesale distributors work on volume, the more they can sell, the better. As a result, there is a focus on large customers able to make long-term purchase contracts with a lower per-unit price than other sources can offer.
This generally means distributors focus on selling to larger retailers, government and large ecommerce businesses.
The Downside to Dealing With Wholesale Distributors
This all sounds great, so what’s the catch? The big problem for small businesses and entrepreneurs is the sales volume requirements. These distributors, who work with top brand names such as Apple, Samsung, LG and Microsoft, sell their merchandise almost exclusively to larger customers. So what happens if you’re too small to work directly with these distributors? In order for you to access this merchandise, you need a middleman. In this case - a wholesaler. Although the names sound very similar, a wholesaler is not the same as a wholesale distributor.
As we discussed above, wholesalers may source their product from distributors or through other means - but the key issue is that they are able to supply both large and small businesses alike. Unfortunately, you’ll need to pay a middleman markup making your costs slightly higher than theirs but that’s how things work.
How To Choose A Wholesaler For Your Business
There are factors you should consider when choosing a wholesaler that’s right for your business:
There are directories available online of wholesalers and distributors that you should take a look at, and you should check out customer reviews of any that look like they might be a good fit for your business. Word of mouth is also important. There are plenty of forums and sites where business owners discuss their experiences with wholesalers. However, if a supplier asks for a monthly membership or service fee then they're unlikely to be legitimate.
Do They Sell to Smaller Businesses?
As we have mentioned, you need to know what accessibility the wholesaler offers to smaller businesses. Things to look out for include minimum order requirements, customer loyalty programs and the ability to make purchases without signing lengthy contracts.
Customer Service and Sales Support
A good wholesaler will be available to contact via email, webchat and phone so any queries you have can be answered promptly and professionally. They should know their products inside and out and be prepared to share information with their customers when asked. This demonstrates to customers that not only do they know their business, but they also stand by the products they sell.
In order to lower your shipping costs try to find a wholesale partner with warehouse locations as close to you as possible. Some companies will allow you to pickup orders yourself directly from their facilities which is ideal for a small business.
Understanding the Wholesale Business
You need to understand the listings, and know what you are buying. Conditions vary by wholesaler, at goWholesale you will find:
Brand New - factory sealed - these products are brand-new and have never been opened and still have their original factory shrink-wrapping.
Brand New - open box - these products are brand-new and have never been opened, either in original packaging or a suitable replacement. No factory shrink wrapping.
Certified Refurbished - items that have been rigorously tested and certified like new according to the standards used by the original manufacturer. Fully functional without any signs of wear or cosmetic defects. These include their full range of accessories and retail-ready packaging (original box or new suitable replacement).
Refurbished - scratch and dent - items that have been rigorously tested and certified like new according to the standards used by the original manufacturer. Fully functional but with signs of wear or cosmetic defects. These include their full range of accessories and retail-ready packaging (original box or new suitable replacement).
If you’re buying brand new factory sealed goods they will come with a manufacturer’s warranty. However, if you are buying returned or refurbished goods the manufacturer’s warranty is no longer valid. However, reputable wholesalers will offer their own warranties on this type of product.
We hope this guide has given you a clearer idea of what a wholesale distributor is, and how to choose a wholesaler for your business. Choosing to source from a wholesaler or wholesale distributor can be very rewarding and profitable as long as you follow these handy tips and stick to a few simple rules.