Wholesale Trade Industry

Significant Points

Nature of the Industry[About this section] [To Top]

When consumers purchase goods, they usually buy them from a retail establishment, such as a supermarket, department store, gas station, or Internet site. When businesses, government agencies, or institutions, such as universities or hospitals, need to purchase goods, they normally buy them from wholesale trade establishments. Retail establishments purchase goods for resale to consumers, but other establishments purchase equipment, motor vehicles, office supplies, or any other items for their own use.

Goods and services. The size and scope of firms in the wholesale trade industry vary greatly. Wholesale trade firms sell any and every type of good. Customers of wholesale trade firms buy goods for use in making other products, as in the case of a bicycle manufacturer that purchases steel tubing, wire cables, and paint. Customers also may purchase items for use in the course of daily operations, as when a corporation buys office furniture, paper clips, or computers. Other customers purchase a wide variety of goods for resale to the public, as does a department store that purchases socks, flatware, or televisions. Wholesalers may offer only a few items for sale, perhaps all made by one manufacturer, or only a narrow range of goods, such as very specialized machine tools. Others may offer thousands of items produced by hundreds of different manufacturers, such as all the supplies necessary to open a new store, including shelving, light fixtures, wallpaper, floor coverings, signs, cash registers, accounting ledgers, and perhaps even some merchandise for resale.

Wholesale trade firms are essential to the economy. They simplify flows of products, payments, and information by acting as intermediaries between the manufacturer and the final customer. They may store goods that neither manufacturers nor retailers can store until consumers require them. In so doing, they fill several roles in the economy. They provide businesses, institutions, and governments a convenient nearby source of goods made by many different manufacturers, which allows them to devote minimal time and resources to transactions. For manufacturers, wholesalers provide a national network of a manageable number of distributors of their goods that allow their products to reach a large number of users. In addition, wholesalers help manufacturers by taking on some marketing, new customer sales contact, order processing, customer service, and technical support work that manufacturers otherwise would have to perform.

Besides selling and moving goods to their customers, some wholesalers may provide other services. These extra service options include the financing of purchases, customer service and technical support, product marketing services such as advertising and promotion, technical or logistical advice, and installation and repair services. After customers buy equipment, such as cash registers, copiers, computer workstations, or various types of industrial machinery, they may need assistance integrating the products into the customer's workplace. Wholesale trade firms often employ workers to visit customers, install or repair equipment, train users, troubleshoot problems, or provide expertise on how to use the equipment most efficiently.

Industry organization. There are two main types of wholesalers: Merchant wholesalers and wholesale electronic markets and agents and brokers. Merchant wholesalers generally take title to the goods that they sell; in other words, they buy and sell goods on their own account. The merchant wholesale segment also includes the individual sales offices and sales branches (but not retail stores) of manufacturing and mining enterprises apart from their plants or mines that market their products.

Merchant wholesalers deal in either durable or nondurable goods. Durable goods are new or used items that generally have a normal life expectancy of 3 years or more. Establishments in this part of wholesale trade are engaged in wholesaling goods, such as motor vehicles, furniture, construction materials, machinery and equipment (including household appliances), metals and minerals (except petroleum), sporting goods, toys and hobby goods, recyclable materials, and parts. Nondurable goods are items that generally have a normal life expectancy of less than 3 years. Establishments in this part of wholesale trade are engaged in wholesaling goods, such as paper and paper products, chemicals and chemical products, drugs, textiles and textile products, apparel, footwear, groceries, farm products, petroleum and petroleum products, alcoholic beverages, books, magazines, newspapers, flowers and nursery stock, and tobacco products.

Firms in the wholesale electronic markets and agents and brokers segment arrange for the sale of goods owned by others, generally on a fee or commission basis. They act on behalf of the buyers and sellers of goods, but generally do not take ownership of the goods. This sector includes agents and brokers as well as business-to-business electronic markets that use electronic means, such as the Internet or Electronic Data Interchange (EDI), to facilitate wholesale trade.

Only firms that sell their wares to businesses, institutions, and governments are considered part of wholesale trade. As a marketing ploy, many retailers that sell mostly to the general public present themselves as wholesalers. For example, "wholesale" price clubs, factory outlets, and other organizations are retail establishments, even though they sell their goods to the public at "wholesale" prices.

Recent developments. Radio frequency identification (RFID) technology is being used more frequently by larger wholesale distributors with warehouses. RFID tags coupled with a satellite and receiver system allow wholesalers to keep track of the goods they have in stock and through transit to ensure delivery. RFID technology has the potential to streamline the inventory and ordering processes, eliminating the need for manual barcode scans and reducing counting and packing errors. However, not all wholesalers will implement this technology as it may not be cost-effective for some smaller firms or clients.

Many larger independent wholesale distribution companies have also started "private-labeling" their goods—contracting with the manufacturer to put their name on the label instead of the manufacturers.

Working Conditions[About this section] [To Top]

Hours. Most workers in wholesale trade worked at least 40 hours a week in 2008, and about 19 percent worked 50 or more hours a week. Many put in long shifts, particularly during peak times. Other workers, such as produce wholesalers, work unusual hours. Produce wholesalers must be on the job before dawn to receive shipments of vegetables and fruits, and they must be ready to begin delivering goods to local grocers in the early morning.

Work environment. Working conditions and physical demands of wholesale trade jobs vary greatly. Moving stock and heavy equipment can be strenuous, but freight, stock, and material movers may make use of forklifts in large warehouses. Workers in some automated warehouses use computer-controlled storage and retrieval systems that further reduce labor requirements. Employees in refrigerated meat warehouses work in a cold environment and those in chemical warehouses often wear protective clothing to avoid harm from toxic chemicals. Outside sales workers are away from the office for much of the workday and may spend a considerable amount of time traveling. On the other hand, most management, administrative support, and marketing staff work in offices.

Overall, work in wholesale trade is relatively safe. However, wholesale trade workers who dealt with lumber and construction materials; groceries; and beer, wine, and distilled beverages experienced injury and illness rates that were higher than the national average.

Employment[To Top]

Wholesale trade had about 6 million wage and salary jobs in 2008. About 90 percent of the establishments in the industry were small, employing fewer than 20 workers, and they had about 35 percent of the industry's jobs. Although some large firms employ many workers, wholesale trade is characterized by a large number of relatively small establishments when compared with other industries. Wholesale trade jobs are spread throughout the country.

Occupations in the Industry[To Top]

Many occupations are involved in wholesale trade, but not all are represented in every type of wholesale trade firm. Merchant wholesalers are by far the largest segment of the industry. The activities of these wholesale trade firms commonly center on storing, selling, and transporting goods. As a result, the three largest occupational groups in the industry are office and administrative support workers, many of whom work in inventory management; sales and related workers; and workers in transportation and material moving occupations, most of whom are truck drivers and material movers. In 2008, 71 percent of wholesale trade workers were concentrated in these three groups (table 1).

Office and administrative support occupations. Many types of administrative support workers are needed to control inventory. Shipping, receiving, and traffic clerks check the contents of shipments, verifying condition, quantity, and sometimes shipping costs. They may use computer terminals or barcode scanners and, in small firms, may pack and unpack goods. Order clerks handle order requests from customers, or from the firm's regional branch offices in the case of a large, decentralized wholesaler. These workers take and process orders, and route them to the warehouse for packing and shipment. Often, they must be able to answer customer inquiries about products and monitor inventory levels or record sales for the accounting department. Stock clerks and order fillers code or price goods and store them in the appropriate warehouse sections. When they receive a customer order, they retrieve the appropriate type and quantity of goods from the warehouse. In some cases, they also may perform tasks similar to those performed by shipping and receiving clerks.

Sales and related occupations. Generally, workers in sales and related occupations try to interest customers in purchasing a wholesale firm's goods and assist them in buying the goods. Most sales and related jobs in wholesale trade are for sales representatives. There are three primary types of sales people in wholesale firms: inside sales workers, outside sales workers, and sales worker supervisors.

Sales representatives may work in either inside sales or outside sales. Inside sales workers generally work in sales offices taking sales orders from customers. They also increasingly perform duties such as problem solving, solicitation of new and existing customers, and handling complaints. Outside sales workers are generally considered to be more highly skilled. They travel to places of business—whether manufacturers, retailers, or institutions—to maintain contact with current customers or to attract new ones. They make presentations to buyers and management or may demonstrate items to production supervisors. In addition to selling products, sales workers also offer services to existing clients such as installation, repair, and maintenance. Sales representatives may be known as manufacturers' representatives or agents in some wholesale trade firms.

Sales worker supervisors monitor and coordinate the work of the sales staff and often do outside sales work themselves. Counter clerks wait on customers who come to the firm to make a purchase.

Transportation and material moving occupations. Transportation and material moving workers move goods around the warehouse, pack and load goods for shipment, and transport goods to buyers. Laborers and freight, stock, and material movers manually move goods to or from storage and help to load delivery trucks. Hand packers and packagers also prepare items for shipment. Industrial truck and tractor operators use forklifts and tractors with trailers to transport goods within the warehouse, to outdoor storage facilities, or to trucks for loading. Truck drivers transport goods between the wholesaler and the purchaser or between distant warehouses. Driver/sales workers deliver goods to customers, unload goods, set up retail displays, and take orders for future deliveries. These workers must be knowledgeable about the products they are delivering and are responsible for maintaining customer confidence and keeping clients well-stocked. Sometimes these workers visit prospective clients in hopes of generating new business.

Management, business, and financial operations occupations. Management and business and financial operations workers direct the operations of wholesale trade firms. First-line supervisors oversee warehouse workers—such as clerks, material movers, and truck drivers—and see that standards of efficiency are maintained. General and operations managers and chief executives supervise workers and ensure that operations meet the standards and goals set by top management. Managers with ownership interest in smaller firms often also have some sales responsibilities.

To provide manufactured goods to businesses, governments, or institutional customers, merchant wholesalers employ large numbers of wholesale buyers and purchasing managers. Wholesale buyers purchase goods from manufacturers for resale, based on price and what they think customers want. Purchasing managers coordinate the activities of buyers and determine when to purchase what types and quantities of goods.

Installation, maintenance, and repair occupations. Many wholesalers do not just sell goods to other businesses; they may also install and service these goods. Some installation, maintenance, and repairworkers set up, service, and repair these goods. Others maintain vehicles and other equipment.

Table 1. Employment of wage and salary workers in wholesale trade, 2008 and projected change, 2008-2018. (Employment in thousands)
Occupation Employment, 2008 Percent Change,
2008-18
Number Percent
All occupations 5,963.9 100.0 4.3
Management, business, and financial occupations 569.3 9.6 3.7
  General and operations managers 140.6 2.4 -6.5
  Sales managers 64.4 1.1 17.9
  Wholesale and retail buyers, except farm products 55.2 0.9 0.3
  Accountants and auditors 58.8 1.0 8.8
Professional and related occupations 343.2 5.8 4.2
  Computer specialists 173.4 2.9 -1.2
Sales and related occupations 1,599.5 26.8 8.2
  First-line supervisors/managers of non-retail sales workers 101.1 1.7 7.0
  Sales representatives, wholesale and manufacturing, technical and scientific products 253.2 4.3 9.0
  Sales representatives, wholesale and manufacturing, except technical and scientific products 956.5 16.0 9.4
Office and administrative support occupations 1,410.6 23.7 2.5
  First-line supervisors/managers of office and administrative support workers 75.8 1.3 5.1
  Bookkeeping, accounting, and auditing clerks 150.7 2.5 4.4
  Order clerks 78.9 1.3 -27.3
  Shipping, receiving, and traffic clerks 168.5 2.8 -6.2
  Stock clerks and order fillers 202.3 3.4 9.2
  Secretaries and administrative assistants 155.1 2.6 -0.1
  Office clerks, general 175.0 2.9 6.2
Installation, maintenance, and repair occupations 386.6 6.5 4.4
  Vehicle and mobile equipment mechanics, installers, and repairers 126.3 2.1 5.7
Production occupations 318.6 5.3 4.6
  Team assemblers 75.9 1.3 7.1
Transportation and material moving occupations 1,224.2 20.5 1.9
  Driver/sales workers and truck drivers 509.0 8.5 8.1
  Laborers and freight, stock, and material movers, hand 403.1 6.8 -5.0
NOTE: Columns may not add to total due to omission of occupations with small employment.

Training and Advancement[About this section] [To Top]

Although many jobs in wholesale trade require only a high school diploma, employers increasingly prefer at least some postsecondary education for their sales team and management positions. All entry-level workers typically receive on-the-job training—for example, in the operation of inventory management databases, online purchasing systems, or electronic data interchange systems. Workers must keep informed of new selling techniques, management methodologies, and information systems because the industry is constantly being changed by technological advances and market forces. In addition, technological advances are affecting the skill requirements for occupations across the entire industry—from warehouse workers to truck drivers to managers. As a result, numerous firms devote significant resources to worker training.

Advancement opportunities may depend on the occupation. As the wholesale trade industry continues to evolve in the coming years, advancement opportunities will be more limited. With the increasing use of the Internet and other electronic means of communication, as well as changing sales techniques, managers are faced with mounting demands, making it more difficult to promote workers with less education from within the firm. However, consolidation among wholesale trade firms has resulted in larger companies with more advancement opportunities for those with the appropriate skills.

Office and administrative support occupations. Many office and administrative positions currently do not require education beyond a high school degree. However, any additional education or previous experience is considered an asset by many employers. Advancement opportunities for these occupations may be more limited. Workers may eventually become an office or administrative supervisor or perform different tasks within the office. Some workers may move into an inside sales or customer service position after spending some time with the company.

Sales and related occupations. Many sales and related workers enter the industry with some form of postsecondary training, although some have only a high school diploma. Employers prefer candidates with an associate or bachelor's degree in business, marketing, industrial distribution, or a related field. Additionally, many employers seek applicants with prior sales experience. Depending on the type of product being sold or distributed, some technical expertise may also be an asset.

There are a growing number of industrial distribution programs at community colleges and universities, providing students with the business and technical training that employers find desirable. All sales workers should expect to take classes and seminars periodically to learn new skills as the industry adapts to new technology and business practices.

Some sales personnel may advance inside the company, through promotion to supervisor or to outside sales. Sales representatives may also decide to advance by starting their own sales company, commonly called a manufacturers' representative company. The owners of these companies, along with their sales personnel, may obtain certifications such as the Certified Professional Manufacturers' Representative (CPMR) certification or the Certified Sales Professional (CSP) certification from the Manufacturers' Representatives Educational Research Foundation.

Transportation and material moving occupations. Workers involved in transportation or material moving do not necessarily need education beyond a high school diploma. For some occupations, such as truck drivers and driver/sales workers, having a driver's license or a State Commercial Driver's License (CDL) may be essential. Drivers of medium and heavy trucks need a CDL.

Those starting in warehouses may have some room for advancement. For example, they may be trained for jobs as industrial truck and tractor operators. Others become familiar with the products and procedures of the firm while working in the warehouse or stock room and may be promoted to counter sales or even to inside sales positions. Some may be trained to install, service, and repair the products sold by the firm. Eventually, some workers may advance to outside sales positions or possibly to managerial positions, though this is less frequent than in the past.

Management, business, and financial operations occupations. Because of technological advances and changing job responsibilities, wholesale employers are increasingly hiring candidates with some postsecondary education for many management, business, and financial operations occupations. For upper-level and senior management positions, many employers look for candidates with a bachelor's degree or higher, along with some previous managerial experience.

Depending on what level an employee enters a company, there are various advancement opportunities. For example, first-line supervisors may move up to senior level management or receive more responsibilities. Currently, several large firms in the industry have formal management training programs that train college graduates for management positions, and the number of these programs will probably grow.

Installation, maintenance, and repair occupations. Although there are no formal education requirements for these occupations, firms usually hire workers with maintenance and repair experience or mechanically inclined individuals who can be trained on the job.

Like transportation and material moving workers, installation, maintenance, and repair occupations may have some room for advancement. This may include promotion to a sales position or to becoming a first-line supervisor. Many firms also have opportunities for on-the-job or offsite training for workers to acquire more skills in their profession.

Outlook[About this section] [To Top]

Employment in wholesale trade will increase slowly as consolidation into fewer and larger firms occurs, eliminating the jobs of redundant workers, while new technology allows operations to become more efficient. Employment will decline in some occupations but new jobs will be created in others.

Employment change. Over the 2008–2018 period, wage and salary employment in wholesale trade is projected to grow by 4 percent, compared to 11 percent growth for all industries combined. Consolidation and the spread of new technology are the main reasons for slow employment growth. Employment in the industry still depends primarily on overall levels of consumption of goods, which should grow with the economy. Growth will vary, however, depending on the products and sectors of the economy with which individual wholesale trade firms are involved. For example, because of the Nation's aging population, growth is expected to be higher than average for wholesale trade firms that distribute pharmaceuticals and medical devices.

The Internet, e-commerce, radio frequency identification systems (RFID), and electronic data interchange (EDI) have allowed wholesalers and their customers to better gather price data, track inventory and deliveries, obtain product information, and market products. Increased automation of recordkeeping, ordering, routing, billing, and processing, and the ability of clients to perform self-service in the ordering process, will result in slower growth or declines for office and administrative support occupations, particularly those directly involved in the ordering and recordkeeping process such as shipping, receiving, and traffic clerks and order clerks.

With these new technologies making it easier for firms to bypass the wholesaler altogether and order directly from the manufacturer or supplier, wholesale firms are putting greater emphasis on customer service to distinguish themselves from these other suppliers. Wholesale firms are offering more services such as installation, maintenance, assembly, and repair work and creating many jobs for workers to perform these functions. As more customers gather information and complete orders through the Internet, more customer service workers and inside sales workers will also be needed to answer questions or meet the demands of clients in a more immediate fashion than outside sales workers are able to.

Consolidation of wholesale trade firms into fewer and larger companies will contribute to relatively slow employment growth in the future. There is strong competition among wholesale distribution companies, manufacturers' representative companies, and logistics companies for business from manufacturers. Cost pressures are likely to continue to force wholesale distributors to merge with other firms or to acquire smaller firms. The consolidation of wholesale trade into fewer, larger firms will make some staff redundant and reduce demand for some workers, especially office and administrative support workers. However, due to the diverse needs and size of clients there will continue to be demand for smaller regional and independent wholesalers in the future.

Job prospects. Although job growth in wholesale trade will be slow, a large number of job openings will arise as people retire or leave the occupation for other reasons. Job prospects are still expected to be good for some occupations.

Growth in electronic distribution channels will create favorable job prospects for computer specialists in the wholesale trade industry. Wholesalers' presence in e-commerce and the uses of electronic data interchanges (EDI) will require more computer specialists to develop, maintain, and update these systems. Computer specialists will also be needed to install and develop radio frequency identification (RFID) systems for those firms that adopt it, and to troubleshoot any problems these systems encounter.

There will also be some opportunities for self-employment, with some managers and sales workers starting their own manufacturers' representative companies. For example, brokers match buyers with sellers and never actually own goods, so individuals with the proper connections can establish their own agency with only a small investment—perhaps even working out of their home.

Earnings [About this section] [More salary/earnings info] [To Top]

Industry earnings. Nonsupervisory wage and salary workers in wholesale trade averaged $770 a week in 2008, higher than the average of $608 a week for all industries. Earnings varied greatly among specialties in wholesale trade. For example, in the area with the highest earnings—commercial equipment—workers averaged $925 a week; but in the area with the lowest earnings—farm-product raw materials—workers made $525 a week. Wages in selected occupations in wholesale trade appear in table 2.

Table 2. Median hourly wages of the largest occupations in wholesale trade, May 2008
Occupation Merchant wholesalers, durable goods Merchant wholesalers, nondurable goods Wholesale electronic markets and agents and brokers All industries
Sales representatives, wholesale and manufacturing, technical and scientific products $30.93 $34.35 $37.11 $33.75
Sales representatives, wholesale and manufacturing, except technical and scientific products 23.70 23.17 27.45 24.68
Truck drivers, heavy and tractor-trailer 16.48 18.18 17.57 17.92
Customer service representatives 16.23 15.20 16.09 14.36
Bookkeeping, accounting, and auditing clerks 16.01 15.60 16.44 15.63
Shipping, receiving, and traffic clerks 13.57 13.31 13.50 13.30
Office clerks, general 12.61 11.86 11.41 12.17
Truck drivers, light or delivery services 12.51 13.43 13.09 13.27
Stock clerks and order fillers 12.08 11.92 11.81 10.00
Laborers and freight, stock, and material movers, hand 11.60 11.43 11.36 10.89

Part of the earnings of some workers is based on performance, especially in the case of outside sales workers, who frequently receive commissions on their sales. Although many sales workers receive a base salary in addition to a commission, some receive compensation based solely on sales revenue. Performance-based compensation may become more common among other occupations as wholesaling firms attempt to offer more competitive compensation packages.

Benefits and union membership. Like earnings, benefits vary widely from firm to firm. Some small firms offer few benefits. Larger firms may offer common benefits such as life insurance, health insurance, and a pension. Senior level management may receive additional benefits, such as bonuses and a company car. Only about 6 percent of workers in the wholesale trade industry were union members or were covered by union contracts in 2008, compared with about 14 percent of the entire workforce.



*Source: Bureau of Labor Statistics, U.S. Department of Labor. Used by permission.

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