Before a product reaches the consumer, it goes through many different processes from the manufacturer to the wholesaler and all the way to the retailer. Among these roles, it is the wholesaler who plays a crucial part in ensuring that those processes are transparent and efficient. Wholesale distribution is important to many industries as it enhances and streamlines the flow of processes within distribution channels, but it is prone to challenges as the marketplace continues to evolve. China wholesale distributors are no exception to that, and it is important to know the challenges that they are dealing with before you make the decision to work with any of them!
Understanding wholesale distribution
Wholesale distributors help with the purchase of large amounts of goods from a manufacturer or producer at reasonable prices. They work directly with the manufacturer and buys goods in bulk. Then, they store the goods in a physical warehouse before these are distributed or resold to customers. China wholesale distributors are also responsible for managing their own inventory, handling shipments, and accepting purchase orders. They can distribute products using their own brands, too, and that makes it easier to build one’s own brands. In some cases, a manufacturer may be its own wholesaler.
How it works
The wholesale distributor acts as the middleman between the retailer (seller of the products) and the manufacturer (the entity producing the products). The wholesalers may use drop shipping to ship the products directly to their end customers. These days, there are distributors that are associated with manufacturers under similar companies, while others establish partnerships with manufacturers.
Challenges to wholesale distribution
The objective of wholesale distribution is to purchase high-demand goods at lower prices. However, there are certain challenges that can occur, like disintermediation, which occurs when there are more retailers and manufacturers rely on their own networks to get the goods to their customers without the need for distributors. Big-box retailers typically do that for enhanced profit margins, since they could sell goods at higher costs and retailers can get them cheaper.
This practice becomes prevalent because of technology. Today, you can simply go online to find manufacturers and get in touch with them on your own. However, you might find it challenging to find companies on your own, and if you want to save time and avoid the hassle of contracting with a shady company, you might want to keep relying on China wholesale distributors.
Inventory management
One of the critical tasks in wholesale distribution is keeping track of the products going in and out of the warehouse. Proper inventory management is important in identifying how much stock you have and how much has been sold. Without it, you might not be able to stock up on time and there will be delays, which can frustrate customers. So, it is important for China wholesale distributors to have the right inventory management practices in place. That is often achievable by investing in new technologies.
Keeping up with demands
China wholesale distributors are also challenged by customer demands. More business owners want their products sooner and they want to make sure that the goods get to them in good condition. Wholesale distributors should be able to keep up with those demands and satisfy their business customers.
