Wholesale Distributors – a Vital Link in the Supply and Demand Chain

Supply and demand is the term that is used to describe the activities that go on when goods are created, bought and sold on to customers in any given market. There is a demand for a product or goods, a supplier will then either make the products or goods or contract someone to do this for them, get the goods into their stores and then sell the finished product to the customer. Usually for most stores it is wholesale distributors that are responsible for supplying them with the goods that they then sell on to their customers.

Without wholesale distributors many companies would go out of business as they would not be able to both produce and then sell their goods. This is the reason that wholesale distributors are such a vital link in the supply and demand chain. One advantage of using wholesale distributors is that they can supply huge amounts of a particular product for a reasonable cost to the seller. This means that the seller can then add their percentage onto the selling price of a product, known as mark up, and make their profit this way.

It may seem on the surface, that it would make more financial sense for wholesale distributors to sell directly to the public and although some do, it is not as profitable as selling to stores and other such businesses. One of the reasons that wholesale distributors do not sell to the public is that they primarily deal with large numbers of each particular product and this is why they can sell them on so cheaply. Selling products in single numbers would not make them such a large profit as they would have more overheads, such as having to pay for stores to sell these goods in.

As wholesale distributors tend to operate from warehouses there is no need for fancy shop floors and advertising campaigns. Instead they merely have the goods shipped to them from the factories and store them in their warehouse until a business makes an order. By doing this wholesale distributors keep their costs low in comparison to their overheads. Many wholesale distributors also deal with many different types of goods and merchandise which means they have the potential to have contracts with many different types of sellers. For example some wholesale distributors might offer children’s toys, kitchenware and clothing as part of their ranges and this gives them more scope to sell more goods to more stores.

Occasionally wholesale distributors need to have a clearout of their stock and this is a time when many stores can stand to benefit as they can buy goods at even less than they normally would. However the wholesale distributor will still make their profit as they wouldn’t sell anything that wouldn’t actually make them a profit. So as you can see wholesale distributors are a vital link in the supply and demand chain and without them many stores would not have any stock to sell on to their customers.