Becoming a wholesale distributor can be a very profitable and sustainable business. It’s especially easier to be one now that you can contact most manufacturers online.

The main role of a wholesale distributor is that of a middleman between the manufacturer and the retailers. This is an important role in a modern economy and it’s worthwhile for everyone, including the final customer.

The Strong Link

 Why is it worthwhile for all? Because wholesale distributors make it possible to sell a certain manufacturer’s goods all over the country, whereas most retailers wouldn’t have the means to go and get the products themselves. Most of the time, this is true for manufacturers as well because they prefer focusing only on “manufacturing” the products.

 Retailers are better off with the wholesale distributors because of 2 main reasons:

  1.  They don’t have to transport the goods themselves, which brings them huge cost savings
  2. They don’t buy large volumes and their negotiation power is limited so they must buy the products at higher prices from the manufacturers.
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 The wholesale distributors buy large amounts of goods and have strong negotiation power, which helps them buy at huge discounts, often 50% or more from the final price. After that they sell it to retailers, who benefit from a smaller price than the one sought by the manufacturer. On top of that, the wholesale distributors deliver the goods at their door.

Business Relationships

 One other great advantage of the wholesale distributors is that they get to have long term steady relationships with their clients, which are the retailers. However they have even stronger relationships with the manufacturers, for whom, as a wholesaler, you may be their primary or only partner in delivering their goods. That’s always a great and profitable position to be in, since it increases your negotiation power further. But why would manufacturers only deal with one or few wholesale distributors?

 Manufacturers also benefit greatly from strong relationships with their wholesale distributors, which is why they are sometimes willing to give them exclusivity as long as the wholesale distributor can reach a vast number of retailers.

Providing New Growth for the Manufacturers

  1.  The wholesale distributors have access to a much bigger number of retailers, thus providing the manufacturers with many more orders. The manufacturers are of course happy to receive more orders even if they are not directly responsible for creating those orders.
  2.  When the manufacturers create new products, they are often rejected by the retailers, because they don’t trust they would sell. That’s where the wholesale distributors come into play. They can better negotiate the accepting of the new products with the retailers. The wholesaler might be providing the retailer with many more products so it would be hard for the retailer to refuse the new product and risk the business relationship with the wholesaler.

 The existence of wholesale distributors, even though being “just a middleman”, has brought great improvements in economy because of the huge growth that it created for the wholesalers themselves, but also for manufacturers and retailers. Without wholesale distributors the economy would move much slower, which means it would also be a disadvantage to the final customer.