Moving goods seamlessly from Point A to Point B – often across nations, oceans, and continents – takes a monumental global logistics effort. The supply chain process is akin to a well-orchestrated performance with individual players comprised of freight forwarders, third-party logistics providers, World Cargo Alliance (WCA) agents, manufacturers, wholesale distributors, and retailers.
Each plays a vital role in assuring that whether the goods are lumber supplies, jet engines, furniture, household goods, appliances, or other products, they travel from their origination point to their final destination on a timely, careful, well-orchestrated journey.
One analogy? Think of the famous 1950s-era Rat Pack performing in Las Vegas; each performer was exceptional, yet different – but all of them contributed to the ultimate performance delivery.
So, in this series of blogs, we’ll look at the multiple stage players along the global supply chain. This time, we’ll focus on wholesalers and distributors or, a combination of those functions – wholesale distributors.
Part 5: Managing the Journey: Wholesalers, Distributors & Wholesale Distributors
Wholesalers, distributors, and wholesale distributors are essential links in the global supply chain. They’ are the players on the world stage ensuring that consumer goods, materials, food products, beverages and a diverse portfolio of other products arrive on time at retail establishments who will sell them to consumers. It’s a complex business, and these companies often pick, pack, and ship goods to hundreds – even thousands – of retail outlets, shops, department stores, restaurants, cruise lines, and other businesses who sell everything and anything to the public.
What’s the difference between the business models? Typically, a wholesaler focuses on fulfilling orders from retailers, looks for ways to save them money in the goods that they require, and often stores those goods until they’re needed by the retailer. IBISWorld’s research shows that there are 686,179 wholesale trade businesses in the U.S. this year, down from -0.2 percent in 2022.
In contrast, a distributor handles orders but often as a sales representative for the producer of the goods; a distributor might sell to wholesalers or even directly to consumers. A wholesale distributor is a melding of all those responsibilities in various ways. Intuit, the QuickBooks brand owner, reports that there are now 408,000 wholesale distributors in the U.S. To be frank, given the evolving direction of companies, it’s hard to separate the entities in clear-cut fashion. But all three are important as intermediaries in the high-volume flow of goods between their origin point and their final destination –into the hands of consumers.
Certainly, the past five years have brought a whirlwind of change for the trio of business models. They’ve weathered everything from lower profitability margins to supply chain disruptions and increased B2B competition from such Internet giants as Amazon and Alibaba, among others. Adding to the workload and upping their costs too is that, increasingly, they’re also tasked with fulfilling new regulatory requirements, and monitoring (tracking and tracing) goods as they move along the entire the supply chain journey.
Innovation and Ability
As a third-party logistics company, Prime Logistics works closely with many in the wholesale or distribution arena, and we recognize their value first-hand. If we had to describe successful wholesalers, distributors, or wholesale distributors in today’s evolving marketplace, we’d cite these two attributes – “constant innovation” and “superb agility.”
That’s because each and every day, these types of companies must focus intently on identifying quality products, monitoring stock availability, evaluating and tracking speed-to-market, and executing with precision and reliability. Increasingly, they need to optimize processes, properly align pricing to be competitive, tap into or create new digital technology, and seek multiple new shipping partners to diversify route-to-market options.
Timeline Masters
To put it simply, successful wholesalers, distributors and wholesale distributors must be “timeline masters.” Some delivery windows are teeny tiny – with deliveries expected the same day. Others are much more lengthy, perhaps multi-week or multi-month. Yet, all goods must arrive on schedule, which creates a fine balancing act in warehousing and stocking. The goal is not retaining too much inventory, which could result in a cash drain, yet not holding onto enough stocked goods, thus creating customer service woes as shortages develop.
Always Looking Ahead
What’s ahead? Experts see the potential for more industry consolidation, corporate streamlining of internal structure, as well as wholesalers even taking on additional responsibilities – such as moving into manufacturing of goods or direct selling to consumers. Certainly, that blurs the supply chain functions, but that’s already happening to some extent as those digital commerce powerhouses have shifted from the B2C model into the B2B marketplace. As a result, some wholesalers, distributors, and wholesale distributors are already looking beyond their normal markets, given stronger competition.
The pace of life has also changed. Speed counts. Buyers are increasingly accustomed to fast service and doing business digitally on a slew of techie devices. So, it’s imperative that wholesalers, distributors, and wholesale distributors closely monitor their customers’ evolving desires and trends.
Fortunately, for many, that’s a priority, and CRMs (customer resource management systems) are helping track interactions with existing customers and find potential opportunities for new ones. To elevate the customer experience, they’re also providing greater personalization, and introducing add-on services, products, and processes. That’s all positive as we head into the last half of 2023 and look to the future.
We hope you’ve enjoyed this Part 5 of our series about the major supply chain players. The next blog in this series will focus on the final link in the journey to market – retailers selling directly to consumers.
About Prime Logistics Group
One of four divisions of Prime Group, an international logistics services conglomerate founded in Ecuador in 2001, Prime Logistics serves to streamline, optimize, and expedite freight to and from the U.S. for a wide range of major industries.
With offices in Miami, New York, Los Angeles, Bogota, Quito, and Amsterdam, Prime Logistics capitalizes on its long-time relationships with the major air carriers, ocean lines, and truckers to offer competitive rates in securing ample space to destinations all around the world.
For information, call 305-592-2044 or visit www.PrimeLogisticsGroup.com.
