Wholesale is the indispensable link between the economic levels of industry, trade and retail. Wholesalers’ customers are retail companies, the hospitality industry, downstream regional wholesalers or processing commercial and industrial companies. Not only new goods are in demand, but also services, organisation, logistics and marketing. Wholesale trade has a turnover of 600 billion. Wholesale trade provides jobs for about 1.2 million people, which corresponds to about 2.3 % of all employed persons in the UK. Wholesale plays an indispensable role in all sectors and at various stages of the value chain, from raw materials and semi-finished products to finished capital goods, consumer goods and consumer goods.
Wholesale: role and prospects
The increasing division of labour and the general rise in prosperity have significantly increased the variety and quantity of goods offered and demanded. Competition and technical progress constantly lead to innovations that constantly create new production and consumer goods. The structural change to a service society complements the range of goods with a growing number of services. The progressive economic unification of Europe as well as the continuous opening of the world markets create new, immeasurable trading areas.
In the course of all these developments, the wholesale trade’s field of activity is constantly changing.
Where once only grain, tea, coffee, cotton or porcelain were traded, today’s wholesalers are able to complement the quality of their goods with a detailed range of their own services. In doing so, they make extensive use of the latest communication and information technologies.
Wholesalers perform a variety of intermediary and bridging functions. They all aim at matching offers (products and services) from suppliers with the demand of customers as effectively as possible:
Wholesaling reduces the number of interfaces between producers and end-users by connecting each supplier with many buyers. In this way, it contributes to increasing efficiency and reducing costs within the value chain.
Wholesale shapes products
Thanks to its proximity to the market and broad product experience, the wholesaler often provides important impulses in product design. This function is becoming more and more important with the increasing desire of consumers for customised products.
Wholesalers are logistics managers
The control and timing of the flow of information and goods between suppliers and buyers (supply chain management) as well as the organisation of transports are among the core functions of wholesalers.
Wholesalers finance and assume risks
While wholesalers pay directly for the goods supplied by the supplier, they relieve the supplier of a considerable risk (sales and debtor risk) and its management. On the other hand, wholesalers assume the procurement risk of the buyers (storage, transport, price, quality risk).
Wholesale does not only supply producers or retailers. It makes it possible to match products and services efficiently with the needs of producers and consumers and to reduce the transaction costs of trade by providing extensive information on procurement and sales markets as well as on the various products.
Wholesalers open up new markets, introduce products and offer extensive marketing concepts. This makes it possible for smaller firms to engage in foreign trade in the first place. They take over logistical tasks, transport and storage of goods according to the most modern systems. Financial and technical services (technical advice, service and maintenance tasks, for example for machines or personnel training). With its services, the wholesale trade also assumes a considerable part of the procurement and sales risks of production. The assumption of currency and transport risks or even warehousing risks ultimately increases the competitiveness of the German economy.
Example: Car industry
JIT (just-in-time) delivery of individual parts and entire components reduces manufacturers’ warehousing costs enormously. Similarly, ever more optimised quality management reduces the number of defective components, which also lowers costs due to reworking and production downtime. Falling costs also lead to more favourable conditions for the end customer due to fierce competition.
Wholesale belongs to the UK middle class. Despite the growth crisis in the UK economy, the share of wholesale trade in the value added of the gross domestic product rose from about 4 to almost 5 percent. Wholesale is part of the UK middle class. Despite the growth crisis in the UK economy, the share of wholesale trade in the value added of the gross domestic product rose from around 4 to almost 5 percent. The number of people employed in the entire sector is just under 1.2 million. That is 2.3 percent of all employed persons in UK.
Many of the companies trade on the UK domestic market and abroad at the same time. In the process, producers as well as craft enterprises and retail companies demand the services of wholesalers. This is why the former is referred to as production link trade and the latter as consumption link trade. Trade in agricultural commodities etc., wholesale trade in raw materials etc. and trade in machinery etc. are counted as production link trade. Consumption-related trade tends to include wholesale trade in foodstuffs etc., trade in consumer goods and other wholesale trade (trades in various finished goods). The overall sector structure of wholesale trade is shown in the figure.
The business success of wholesale can be reduced to a simple formula: If the national economy functions, the trade also functions.
Wholesale: the future
Job lot sale is already a comprehensive service provider. German wholesalers are well equipped for the increasing speed of the international exchange of goods and services and can react flexibly to changes in the environment.
The development towards marketing and sales organisers and the associated know-how will secure wholesalers a position between producer and consumer that is hardly replaceable in the future.
The often cited “danger of being switched off” by modern electronic media does not exist. On the contrary, the ever-widening range of services and complete problem solutions offers wholesalers an “opportunity to switch on”, and they are well prepared for a promising future.