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Don't be confused by websites and retailers claiming to be "wholesale," yet sell to end consumers. To be correctly defined as a wholesale business entity, a merchant must be employed in selling goods and services to other businesses, and not as final sales to regular shoppers. Even after this distinction, there is a great deal of more criteria to determine the status of goods for sale.
The wholesale industry handles two types of goods: durable and nondurable goods. Durable goods are items expected to last longer than three years. Examples include electronics, furnishings, entertainment items, and appliances. Nondurable goods are items consumers must regularly replace. Clothing apparel, paper products, cleaners, and groceries, are all nondurable goods. In both cases, to be considered a true "wholesale" industry player, a business must sell durable and nondurable goods to businesses and organizations intending to resell the items for profit, or consume the items in the course of conducting operations.
There is also a distinction between wholesale electronic markets, and wholesale brokers or agents. A traditional wholesale market will hold title to the goods available for sale. The closeout inventory, or overstock merchandise is physically in possession, and all aspects of the transaction are handled in-house. Wholesale brokers or agents, will often sell liquidation merchandise they only advertise, but do not physically own. One issue with going through a wholesale broker or agent is it is another step between manufacturer and end retailer, and price will move up accordingly.
Most companies in the wholesale business are small privately owned companies, with less than 20 employees. According to the U.S. Department of Labor, the current trend in growth for wholesale companies is to consolidate into larger firms. It is predicted that in order to survive, smaller wholesale companies will eventually have to carve out a small niche and specialize in particular wholesale merchandise. National retailers are going to need national wholesale outlets, and this can make it difficult for smaller firms to compete.
An alternative solution to merging into one large company, is for smaller companies to use a modified model of the wholesale broker or agent definition. Using integrated Electronic Data Interchange, and the Internet for mass marketing, small companies could band together to sell each other's wares on a consignment basis to directly compete with the larger, conglomerated firms. A massive network of real-time data is possible with today's advances in technology and processing speeds. It ends up as a win-win situation: smaller companies have the inventory of large national firms, but consumers benefit from the better-than-average customer service experience smaller firms tend to offer.
So where is the wholesale industry going? In one word: electronic. Improvements in communication, data entry, and automation are revolutionizing the industry. Large warehouses can rely on robotic retrieval of goods, utilize radio frequency transmitters to quickly locate ordered items, and keep it all profitable with instantaneous statistical feedback. This is going to mean the workforce that has historically not required more than a high school diploma for warehouse work, is going to start needing more specialized skills. It isn't just about improving the bottom line, or replacing people with machines; it is also about safety. With 24 hour operations, accidents and mistakes are more commonplace. Let the robot risk it’s trying to take a 300 pound television lot off a top shelf.
The wholesale industry will grow by leaps and bounds as soon as more firms invest in the available technology. Small firms can team up together to protect their interests with a wholesale network. Larger firms will minimize the time delay between when a good is determined overstock and when it finds a new home at the reduced wholesale price. Large retailers will keep their warehouses stocked, and identify a problem in the supply chain long before it impacts the stock on the shelves. The person most happy will be the bargain hunter, who takes home the latest in electronic gear for a fraction of the cost that the next-door neighbor paid.
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