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
Dec 15, 2024 - Logistics Manager’s Index Signals Healthy Growth
- The Logistics Manager’s Index (LMI) posted growth in November 2024, marking the 12th consecutive month of expansion, according to Logistics Management. The November LMI score was 58.4, compared to 58.9 in October and 58.6 in September, with growth over the last three months considered “highly consistent,” per the report. Any reading above 50 indicates that logistics is expanding. The report noted, “This consistency is further evidence for the thesis that the logistics industry has been expanding at a steady, sustainable pace. There is clearly some nervousness about the potential for tariffs and that is covered in this month’s report. Hopefully, the tariffs being threatened is just a negotiating tactic and not something that will be real. That could create damage to the U.S. economy.” The LMI report is compiled by researchers at five universities and receives support from the Council of Supply Management Professionals. The monthly LMI measures eight components within the logistics sector, including inventory levels and costs, warehousing capacity, utilization and prices, and transportation capacity. The report noted that a key highlight in November’s LMI was a predicted slowdown in inventory levels, which fell 3.3% to 56.1, which was expected seasonally. Overall, the logistics industry has seen a pattern of slow and steady growth in 2024 compared to an uneven 2023 created by a combination of high inflation and excess inventories, per the report.
- Consumer confidence levels increased in November 2024, improving by 2.1 points from the previous month, according to The Conference Board. The Consumer Confidence Index was 111.7 in November 2024 from 109.6 in October 2024. Dana Peterson, chief economist at The Conference Board, noted that those remaining most confident on a six-month moving average basis confidence were those aged under 35 and those in the income category of over $100,000. Per Peterson, “Consumer confidence continued to improve in November and reached the top of the range that has prevailed over the past two years.” Purchasing plans for homes stalled while plans to buy new cars rose slightly in November 2024 on a six-month average basis.
- Economic activity in the services sector including the wholesale sector expanded in November 2024, according to the Services ISM Report on Business. The Services PMI registered 52.1% in November, down 3.9 percentage points from October. The reading marked the ninth month of expansion in 2024. Fourteen of the 18 services industries reported growth in November including Accommodation & Food Services; Arts, Entertainment & Recreation; Health Care & Social Assistance; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Public Administration; Finance & Insurance; Management of Companies & Support Services; Retail Trade; Transportation & Warehousing; Information; Professional, Scientific & Technical Services; Construction; and Utilities. Wholesale Trade was one of the industries that reported increases in new orders, employment, prices, and order backlogs, according to the report.
- According to a new study by the National Retail Federation (NRF) of the estimated impact of president-elect Donald Trump’s tariff proposals, the costs of major consumer product categories are expected to rise. Trump has proposed a universal 10-20% tariff on imports from all countries and an additional tax on imports from China. Per the NRF study, consumers would pay $13.9 billion to $24 billion more for apparel, $8.8 billion to $14.2 billion more for toys, $8.5 billion to $3.1 more for furniture, and $6.4 billion to $10.9 billion more for household appliances with the proposed tariffs in place. The study showed the tariffs would have a “significant and detrimental impact” on the costs of a wide range of consumer products, in particular those products supplied primarily by China. US retailers would be unable to absorb the increased costs and would need to raise prices “higher than many consumers would be willing or able to pay.” According to Jonathan Gold, NRF vice president of supply chain and customs policy, “Retailers rely heavily on imported products and manufacturing components so that they can offer their customers a variety of products at affordable prices. A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter. This tax ultimately comes out of consumers’ pockets through higher prices.”
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