Wholesale & Distribution

When it comes to starting a business, purchasing an already established brand offers more advantages compared to starting one from scratch as it provides less work and risk for you.
USA Biz Investing is a great way to gain access to businesses that are on sale in various fields and industries. It doesn’t matter whether you’re looking for a retail business or something in real estate – USA Biz Investing has you covered. One of the business categories they have access to is wholesale and distribution which has over 800,000 companies in the US alone. That’s a market size of $8 trillion.
With that said, we will cover each of these subcategories and go in-depth about them such as the cost of purchasing this type of business, the pros and cons of operating one, and what mistakes to avoid once you’ve finally purchased one.

Types of Wholesalers and Distributors

First, let’s define what are the most popular types of wholesalers and distributors. This will help you gain a clearer idea of what kind of business you should purchase.

• Branches and Mini Offices

  When it comes to branches and mini offices, the manufacturers themselves conduct their own wholesaling and create branches and mini offices where they can distribute their products in bulk directly to the consumers.

• Merchant Wholesalers

  The most common type of wholesaler/distributor, merchant wholesalers buy directly from manufacturers and sell directly to consumers. The storage and liability for any loss are also on the part of these wholesalers as well.

• Brokers and Agents

  This is more common in the industry of real estate. Unlike merchant wholesalers, they don’t have any risks as their only job is to ensure the deal goes through. He earns through commissions made on sales. Brokers are short-term wholesalers, whereas agents are more for long-term deals and their loyalty lies with the company.

Cost of the Wholesale and Distribution Industry

Wholesale and distribution companies are quite popular in the USA, with most businesses being sold at a rate of 3.47x more than their average gross income. This has resulted in a total transaction value of almost $900,000,000 in the past 10 years alone. With that said, the general deal size for this type of business is around $600,000, depending on various factors such as the sales, profits, and growth trends of the business.

Pros and Cons of Running a Wholesale and Distribution Business

As with anything, there are advantages and disadvantages to everything and this includes operating a wholesale and distribution business. We have highlighted below some of the pros and cons of this business category.

Pros

• It’s easier to grow revenue with an established relationship with retailers.
• You will have greater control over the number of sales.
• It will be easier to convince other retailers once you have social proof.
• You won’t need a marketing strategy – the retailers will do it for you.

Cons

• You will need substantial capital.
• You will require a large number of stock in your inventory.

Mistakes to Avoid in Wholesale and Distribution

1. Buying too much supply without predicting the market trends and demands for your product.
2. Forgetting to negotiate with the suppliers and settling for the established price.
3. Lack of following up on your part after sales.
4. Being inefficient when fulfilling orders.
5. Valuing price over quality service.
6. Not taking advantage of the technology available.

Final Thoughts

Owning a wholesale and distribution business is a lucrative investment, but starting one from scratch can pose significant challenges on your part which is why USA Biz Investing should be your go-to site. They will help you find the right wholesale business for you and your goals.