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 639,837 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 639,837 establishments that employ 6 million workers and generate $7 trillion in annual revenue, according to government sources.

    • The wholesale sector represents 5-6% 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%) typically perform the work and may outsource support functions like marketing and accounting.
    • The wholesale sector shed about 51,000 establishments in 2021, which equals about 8% of existing establishments, according to the Bureau of Labor Statistics. However, the sector added about 58,000 new establishments, which is equivalent to 9.1% of existing establishments. As a result, the sector had a growth rate of 1.1%.
    • 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  May 6, 2024 - Import Cargo Volume Expected Up in May
                                  • Despite new supply chain challenges, inbound cargo volume at major container ports in the US is projected to exceed 2 million units in May 2024 for the first time since October 2023, according to the Global Port Tracker report from the National Retail Federation and Hackett Associates. The May projection is up 5.5% from a year ago, and June’s forecast of 2 million TEU is expected to be 8.9% higher year over year. Shipping routes have been strained by difficulties requiring rerouting around the Red Sea and Suez Canal and by March’s shutdown of the Port of Baltimore after an accident at the Francis Scott Key Bridge. According to Jonathan Gold, the NRF VP for Supply Chain and Customs Policy, “US imports are continuing to increase despite another disruption impacting US ports.” Gold added that the logistics challenges show the ongoing need for flexibility and resilience in a company’s supply chain.
                                  • US manufacturing activity contracted in April 2024 after a brief expansion in March, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 49.2% in April, down 1.1 percentage points from the 50.3% recorded in March. A reading above 50% indicates manufacturing expansion. Prior to March’s expansion, US manufacturing activity had fallen below the baseline for growth for 16 consecutive months. April’s New Orders Index was in the contraction zone at 49.1%. The April Production Index was 51.3%, a decrease from March’s 54.6%. Nine manufacturing industries tracked by the ISM reported growth in April: Nonmetallic Mineral Products; Printing & Related Support Activities; Primary Metals; Textile Mills; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Transportation Equipment; Chemical Products; and Plastics & Rubber Products. The industries reporting contraction in April were Miscellaneous Manufacturing; Machinery; Furniture & Related Products; Wood Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Paper Products.
                                  • The US wholesale industry is projected to grow at an over 3% CAGR from 2024 to 2028, slower than the overall economy's growth, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. Sales for the US wholesale industry are forecast to grow at a 3.79% CAGR over the forecast period. The forecast attributed growth, in part, to an improvement in consumer confidence levels, which benefits both the wholesale and retail industries. The forecast also noted that higher prices, which were driven by tightness in labor and other markets along with geopolitical turmoil and other factors, have supported revenue for wholesale and retail distributors in recent years. Per the forecast, "significant shocks to supply, demand, and logistics occurred simultaneously at the outset of the pandemic." Post-pandemic, lingering logistical and production challenges continue to disrupt trade and cause shortages in various markets amid new geopolitical tensions.
                                  • The National Retail Federation (NRF) released its 2024 retail sales forecast, projecting an increase of approximately between 2.5% and 3.5%, reaching sales of between $5.23 trillion and $5.28 trillion. Retailers are part of the target customer base for wholesalers. The projected growth aligns with the 10-year pre-pandemic average annual sales growth of 3.6% and compares with the 2023 annual sales growth of 3.6%, which reached $5.1 trillion. Non-store and online sales (included in the total figure) are expected to grow at a higher rate of 7% to 9% year over year, to a range of $1.47 to $1.5 trillion, compared to $1.38 trillion in 2023. A tight labor market is expected to cool in 2024, with about 100,000 fewer jobs on average per month projected in 2024 compared to 2023. The NRF forecast excludes automobile dealers, gas stations, and restaurants to focus on core retail.
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