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
Jul 8, 2024 - US Service Sector Activity Slows
- The Institute for Supply Management reported its services-sector PMI contracted to 48.8% in June 2024 from 53.8% the previous month. It was the second contraction in a three-month period, following 15 consecutive months above the baseline growth. The report tracked the performance of 18 service sectors, out of which eight showed a decrease in June, including Wholesale Trade. Eight sectors showed gains in June. These sectors include Other Services; Management of Companies & Support Services; Health Care & Social Assistance; Construction; Utilities; Finance & Insurance; Educational Services; and Professional, Scientific & Technical 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.
- Global online retail sales are forecast to grow at an 8.9% CAGR from 2023 to 2028, reaching $6.8 trillion, according to a Forrester report in Retail Dive. In the US, online sales are expected to grow from $1 trillion in 2023 to $1.6 trillion in 2028. China and the US make up about two-thirds of global ecommerce volume. Online sales growth has moderated somewhat since the pandemic but is still robust. Growth is coming from the rise in marketplaces, social commerce, livestream selling, direct-to-consumer selling, online grocery buying, and buy online pick up in store (BOPIS). According to Jitender Miglani, principal forecast analyst at Forrester, “Looking ahead at 2024 and beyond, we expect that online sales will regain momentum from shopping offers and generative AI initiatives.”
- 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.
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