Wholesale Sector Industry Profile

Companies in this industry serve as wholesale merchants of nondurable and durable goods. Distributors specialize by product. Large US distributors include SYSCO (foods); McKesson (drugs); and Avnet (electronics). Top global companies include Switzerland-based pharmaceutical distributor Alliance Boots GmbH, Taiwan-based components wholesaler WPG Holdings, Japan-based medical distributor Mediceo Corporation, Brazil-based petroleum products wholesaler Petrobras, and Germany-based chemical distributor Brenntag AG.

Emerging markets such as China, India, Brazil, and Russia will only grow in importance to wholesalers. Many wholesalers approach new foreign markets through partnerships or acquisitions.

The wholesale distribution industry in the US includes about 300,000 companies with combined annual sales of about $5 trillion and is expected to grow at a low rate in the next two years. A key growth driver is the state of the economy.

COMPETITIVE LANDSCAPE

For most distributors, demand is closely linked to local economic activity. The profitability of individual companies depends on efficient inventory management and order fulfillment operations. Large companies can supply customers with a wider range of goods and in more markets, but smaller distributors can compete successfully by carrying specialty products or providing add-on services. The industry is highly fragmented: the 50 largest distributors generate about 25 percent of industry revenue.

Computer and communications technology have had a major effect on the industry by improving the efficiency of warehouse and distribution operations. Largely because of automation, industry labor productivity improved more than 30 percent ...