Wholesale distribution is the activity performed by companies that buy products in large quantities, in order to resale them in smaller quantities to other merchants or end users who need them for business purposes. Like keeping up with the liquor store supplies that have a high consumption rate in local liquor stores.
The wholesale trade also includes the activities of intermediaries (commissioners and all the others who work on behalf of third parties) whether the distribution is local, national or international.
The value of the wholesale distribution consists in how much the wholesaler earns from selling the goods, as well as in the commission received from the wholesale trade intermediation activity.
The value of wholesale distribution does not include:
- producing units selling their own products directly to commercial units or to other end users
- the stock exchange activity
- producing units exporting their own products directly to retailers
Specific features of wholesale distribution include:
- The selling-purchasing process takes place between businesses (as opposed to retail trade)
- Purchasing and selling goods in bigger quantities
- The wholesale distribution does not end the economic circuit of the goods; it only creates a link between producers/ manufacturers and retailers.
Wholesale trade typically generates:
- fund assets
- expenses necessary to ensure the storage conditions, staff payments etc.
- slower merchandise circulation.