US Wholesale Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 699,324 merchant wholesalers in the US purchase goods from suppliers and sell a mix of those goods to customers. Major customer segments include manufacturers, other distributors, retailers, exporters, institutions (i.e. schools and hospitals), and service providers (i.e. restaurants and hotels). Wholesalers are also known as wholesale merchants, distributors, jobbers, drop-shippers, or import/export merchants.
Competing with Suppliers
The traditional flow of goods from manufacturer to wholesaler and then to retailer or service provider is beginning to break down.
Expansion Pressure
Rapid growth in e-commerce and consumer demand for faster order fulfillment are putting pressure on wholesalers to set up distribution facilities closer to major customers and carry a wider range of goods.
Industry size & Structure
The wholesale sector is comprised of 699,324 establishments that employ 6.1 million workers and generate $7.8 trillion in annual revenue, according to government sources.
- The wholesale sector represents 6% of the nation's Gross Domestic Product (GDP).
- The sector is fragmented with the 20 largest firms representing just 18.6% of revenue.
- In addition to employer establishments, the wholesale sector has 393,682 owner-operated establishments with no employees. Subsectors with the highest numbers of nonemployer establishments are ecommerce wholesalers, agents and brokers (16.8%), grocery wholesalers (7%); apparel, piece goods, and notions wholesalers (6.5%); machinery, equipment, and supplies wholesalers (4.3%) and motor vehicle (4.2%); these firms typically perform the work and may outsource support functions like marketing and accounting.
- While the wholesale sector shed about 56,000 establishments in 2022, it also added about 56,000 new establishments that year.
- The wholesale sector is forecast to grow its employment base by 2.4% overall in 2021-2031, which is much lower than the national average of 5.3% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Wholesale Sector Industry Growth
Recent Developments
Aug 8, 2024 - Sales, Profits Fall in Q1
- Seasonally adjusted sales for wholesale trade corporations totaled $912.8 billion in Q1 2024, a decline of 12.2% from a year ago and down 3.4% from the previous quarter, according to the Census Bureau. Unadjusted after-tax profits for wholesale trade corporations with assets of $50 million and over were $16.5 billion in Q1, down 0.3% from a year ago and down 0.1% from the previous quarter. Employment by wholesalers climbed during the first half of 2024, according to the US Bureau of Labor Statistics (BLS). Average wages at wholesalers have grown year to date through June 2024, reaching $31.23 per hour for nonsupervisory employees.
- US retailers are moving up their overseas orders to avoid potential shipping disruptions later in the year during peak shopping season, according to the Wall Street Journal. Import containers of clothing, furniture, and other products are arriving at US ports in much larger numbers than normal as companies try to manage higher freight rates, geopolitical tensions, and shipping delays. Import volumes at the Los Angeles and Long Beach ports in June 2024 reached their strongest level since the pandemic-related heights of July 2022. In addition, container rates have reached levels not seen since the pandemic. The short-term contract rate to ship a container from Asia to the US West Coast on July 17 was $7,806, four times greater than last year, according to transportation analytics firm Xeneta. The WSJ report noted that the ratio of inventories to sales at US retailers increased to 1.31 in May 2024, the highest level since May 2020. Importers are counting on consumers to increase their spending in the second half of the year to avoid being stuck with excess inventories.
- The Institute for Supply Management reported its services-sector PMI expanded to 51.4% in July 2024 from 48.8% the previous month. The PMI indicated expansion for the 47th time in 50 months, though two of the contractions came in April and June of this year. The report tracked the performance of 18 service sectors, out of which 10 showed an increase in July. Industries reporting growth were Arts, Entertainment & Recreation; Accommodation & Food Services; Mining; Construction; Management of Companies & Support Services; Transportation & Warehousing; Public Administration; Finance & Insurance; Health Care & Social Assistance; and Utilities. Eight sectors showed declines in July, including Wholesale Trade. Other sectors posting a decrease included Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Retail Trade; Professional, Scientific & Technical Services; Information; Educational Services; and Other Services. The Services PMI report is based on data from purchasing and supply executives nationwide compiled by the ISM.
- The National Association of Wholesalers-Distributors (NAW) supports a Texas federal district court's preliminary injunction preventing the Federal Trade Commission (FTC) from enforcing its ruling banning most non-compete agreements. The NAW said wholesaler-distributors use non-competes for well-compensated employees in "targeted, limited, and responsible ways." According to Alex Hendrie, associate vice president of government relations at NAW, "The FTC's proposal ignores the fact that there are clear benefits to limited, targeted non-compete clauses for both employers and employees. Non-competes ensure that wholesaler-distributors can protect proprietary information and important business relationships while investing in their workforce, providing upward mobility for employees, and ensuring high wages and generous benefits." The FTC's ban on non-compete agreements is scheduled to go into effect in September 2024. According to the National Law Review, the federal district court's injunction ruling applies only to a Texas-based tax law firm and a group of business associations; legal challenges to the non-compete ban are pending in other US courts.
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