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Wholesale Trade

Nature of the Industry  |  Working Conditions  |  Employment  |  Occupations in the Industry
Training and Advancement  |  Job Outlook  |  Earnings

Significant Points

• Most workplaces are small, employing fewer than 10 workers.
• Two-thirds work in office and administrative support, sales, or transportation and material-moving occupations.
• While some jobs require a college degree, a high school education is sufficient for most jobs.
• E-commerce, consolidation, and new technology should slow employment growth in some occupations, but many new jobs will be created in other occupations.

Nature of the Industry

When consumers purchase goods, they usually buy them from a retail establishment such as a supermarket, department store, gas station, or cybershop. When retail establishments, other businesses, governments, or institutions—such as universities or hospitals—need to purchase goods for resale, equipment, office supplies, or any other items, they normally buy them from wholesale trade establishments. 

Wholesale trade firms are essential to the economy. They buy large lots of goods, usually from manufacturers, and sell them in smaller quantities to businesses, governments, other wholesalers, or institutional customers. They simplify product, payment, and information flows by acting as intermediaries between the manufacturer and the final customer. They 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 a nearby source of goods made by many different manufacturers; they provide manufacturers with a manageable number of customers, while allowing their products to reach a large number of users; and they allow manufacturers, businesses, institutions, and governments to devote minimal time and resources to transactions by taking on some sales and marketing functions—such as customer service, sales contact, order processing, and technical support—that manufacturers otherwise would have to perform. 

There are three types of wholesale trade firms. Wholesaler-distributors, sometimes known as merchant wholesalers, purchase goods from manufacturers in large quantities, store them, and then sell them to retailers, manufacturers, other wholesalers, or other customers. They are by far the most common type of wholesaling business. Wholesalers are companies that resell products to another intermediary; distributors resell to the final customer. 

Sales branches and offices of manufacturing operations are local offices of manufacturers. They market their own products and coordinate distribution directly from the producer to the buyer. They rarely handle stock during a sale. 

Wholesale agents or brokers coordinate the sale of goods from one party to another—usually from manufacturers to retailers. This category includes auction companies and commission merchants. They seldom take title to or handle goods in the process. 

Only firms that sell most of 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. 

The size and scope of firms in the wholesale trade industry vary greatly. They sell any and every type of good. Customers buy goods to use in making other products, such as a bicycle manufacturer that purchases steel tubing, wire cables, and paint; for use in the course of daily operations, such as a corporation that buys office furniture, paper clips, or computers; or for resale to the public, such as 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 they may offer thousands of items produced by hundreds of different manufacturers. Wholesalers may sell only a narrow range of goods, such as very specialized machine tools, or a broad range of goods, such as all the supplies necessary to open a new store, including shelving, light fixtures, wall paper, floor coverings, signs, cash registers, accounting ledgers, and perhaps even some merchandise for resale. 

Besides selling and moving goods to their customers, wholesaler-distributors may provide other services to clients, such as the financing of purchases, customer service and technical support, 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, assistance often is needed to integrate the products into the customers’ workplace. Wholesale trade firms often employ workers to visit customers, install or repair equipment, train users, troubleshoot problems, or advise on how to use the equipment most efficiently. 

Working Conditions

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 be aided by 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. In 1999, there were 5.6 work-related injuries or illnesses per 100 full-time workers, less than the 6.3 incidence rate for the entire private sector. Not all wholesale trade sectors are equally safe, however. Occupational injury and illness rates were considerably higher than the national average for wholesale trade workers who dealt with lumber and Construction materials (9.8 per 100 workers); metals and minerals (11.5); groceries (10.6 per 100 workers); and beer, wine, and distilled beverages (10.4 per 100 workers). 

Most workers put in long shifts, particularly during peak times, and others, such as produce wholesalers, work unusual hours. The latter group of workers must be on the job early in the morning to receive shipments of vegetables and fruits, and they must be ready to deliver goods to local grocers at dawn. 

Employment

Wholesale trade accounted for about 7 million wage and salary jobs in 2000, about 5 percent of all jobs in the economy. Firms that employed 10 or more workers provided about 83 percent of the jobs in wholesale trade; nevertheless, roughly 7 out of 10 establishments in the industry are small, employing fewer than 10 workers (see chart) in 1997. Although some large firms employ many workers, when compared with other industries, wholesale trade is characterized by a large number of relatively small establishments. Wholesale trade workers are spread fairly evenly throughout the country, have relatively low union membership, and are more likely to work full time than are workers in most other industries.

Occupations in the Industry

Many occupations are involved in wholesale trade, but not all are employed in every type of wholesale trade firm. For example, manufacturers’ sales branch offices do not employ wholesale buyers, because they do not purchase goods for resale; and brokers employ few stock clerks or truck drivers, because they keep little stock. Wholesaler-distributors—by far the largest part of the industry—employ workers in most of the occupations that appear in table 1. 

The activities of wholesale-distribution 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 transportation and material-moving occupations , most of whom are truck drivers and material movers. In 2000, two-thirds of wholesale trade workers were concentrated in these three groups. 

Most office and administrative support workers need to have at least a high school diploma, and some related experience or additional schooling is an asset. As in most industries, many secretaries and bookkeeping, accounting, and general office clerks are employed in wholesale trade. Most of the other administrative support workers are needed to control inventory. Shipping receiving, and traffic clerks check the contents of all shipments, verifying condition, quantity, and sometimes shipping costs. They may use computer terminals or bar code 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 code or price goods and store them in the appropriate warehouse sections. They also retrieve from stock the appropriate type and quantity of goods ordered by customers. In some cases, they also may perform tasks similar to those performed by shipping and receiving clerks. 

Like office and administrative support workers, many sales and related workers need no postsecondary training, but many employers seek applicants with prior sales experience. Generally, workers in marketing and sales occupations try to interest customers and assist them in purchasing a wholesale firm’s goods. There are three primary types of sales people in wholesale firms, and their duties vary considerably. 

Counter sales workers wait on customers who come to the firm to make a purchase. These workers must be knowledgeable about product lines and able to use computer terminals to check on the availability of particular goods in inventory. 

Inside sales workers usually are more experienced and more knowledgeable about specific products, prices, and the lead times required for delivery. Like order clerks, they take phone orders but may also solicit new business over the phone or the Internet. 

Outside sales workers, also called wholesale sales representatives or sales engineers, are the most skilled workers and one of the largest occupations in wholesale trade. They travel to customers’ places of business—whether manufacturers, retailers, or institutions—to maintain current customers or to attract new ones. They make presentations to buyers and management or may demonstrate items to production supervisors. Sales representatives must be very knowledgeable about product operation, prices, maintenance needs, and capabilities and must be thoroughly familiar with customers’ needs and business goals so that they can suggest how customers can use products to their greatest advantage. For example, sales representatives sometimes advise manufacturers on how to use a new piece of equipment to make production more efficient or may train workers to use the equipment. In the case of complex equipment, sales engineers may need a great deal of highly technical knowledge. For this reason, some outside sales workers need to have postsecondary technical education. 

Sales worker supervisors monitor and coordinate the work of the sales staff and often do outside sales work themselves. 

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 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. Drivers of medium and heavy trucks need a State Commercial Driver’s License (CDL). Driver/sales workers deliver goods to customers, unload goods, set up retail displays, and take orders for future deliveries. They are responsible for maintaining customer confidence and keeping clients well-stocked. Sometimes these workers visit prospective clients, in hopes of generating new business. 

Management and business and financial operations workers direct the operations of firms and include general and operations managers and chief executives , as well as middle managers, who supervise workers and ensure that operations meet standards and goals set by top management. Managers with ownership interest in smaller firms often also have some sales responsibilities. 

Two large occupations are 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 workers set up, service, and repair equipment sold by wholesalers. Others maintain vehicles and other equipment. For these jobs, firms usually hire workers with maintenance and repair experience or mechanically inclined individuals who can be trained on the job. Supervising warehouse workers—such as clerks, material movers, and truck drivers—and seeing that standards of efficiency are maintained is the work of first-line supervisors. 

Training & Advancement

Although some workers need a college degree, most jobs in wholesale trade can be entered without education beyond high school. New workers usually receive training after they begin work—for instance, in operation of inventory management databases, on-line purchasing systems, or electronic data interchange systems. Technological advances and market forces are rapidly altering this industry. Even workers in small firms need to keep informed about new selling techniques, management methodologies, and information systems. In addition, these technological advances affect the skill requirements for occupations across the entire industry—from warehouse workers to truck drivers to those in management. As a result, numerous firms devote significant resources to worker training. 

Many firms offer on-the-job training. However, as providing training is becoming more costly and complex, the industry is increasingly using third-party training organizations and trade associations to reduce this burden. To increase productivity, many companies make their employees responsible for more than one function and cross-train them by familiarizing them with many aspects of the company. 

Wholesale trade has historically offered good advancement opportunities from the lowest skilled jobs up through management positions. For example, unskilled workers can start in the warehouse or stock room. After they become familiar with the products and procedures of the firm, workers may be promoted to counter sales or even to inside sales positions. Others may be trained to install, service, and repair the products sold by the firm. Eventually, workers may advance to outside sales positions or to managerial positions. Wholesale trade firms often emphasize promotion from within, especially in the numerous small businesses in the industry. Even in some of the largest firms, it is not uncommon to find top executives who began as part-time warehouse help. 

As the wholesale trade industry changes in the coming years, advancement opportunities could become more limited. New technologies and changing management techniques are placing increasing demands on managers, so it will become more difficult to promote less-educated workers from within. However, consolidations have resulted in larger companies with more opportunities for those with the appropriate skills to advance. Currently, several large firms in this industry have formal management training programs that train college graduates for management positions, and the number of these programs will probably grow. There are also a growing number of industrial distribution programs at universities providing students with both business and technical training. 

In addition to advancement opportunities within a firm, there also are opportunities for self-employment. For example, because brokers match buyers with sellers and never actually own goods, those with the proper connections can establish wholesale brokerage businesses with only a small investment—perhaps working out of their home. Moreover, establishing a wholesale-distribution business can be easier than establishing many other kinds of businesses. Wholesalers who get exclusive distribution rights to popular items can become profitable quickly; although wholesale-distribution firms usually require a substantial investment, obtaining rights to a successful product can be the foundation of a successful new business. 

All workers should expect to periodically take classes and seminars to learn new skills as the industry adapts to new technology and business practices. 

Job Outlook

Wage and salary jobs in wholesale trade are projected to grow by 11 percent over the 2000-10 period, compared with the 15-percent rate of growth projected for all industries combined. Industry trends will change the composition and nature of much wholesale trade employment. Electronic commerce (usually called e-commerce), consolidation of the industry into larger firms, and the spread of new technology should slow growth in some occupations. However, many new jobs will be created in other fields as firms provide a growing array of support services. In addition, the roles of many other workers will change. 

Wholesale trade will undoubtedly feel the effects of e-commerce. E-commerce allows people and companies to instantly obtain price quotes and product information, make and process transactions, track product delivery, and share marketing information. Demand for some occupations will decline as e-commerce dramatically improves worker productivity, although previous technological improvements have already refined the distribution system in many areas of ordering, fulfillment, and purchasing. 

The two largest occupational groups in wholesale trade—office and administrative support, and sales and related occupations—will be the most affected. As customers purchase goods and track their delivery electronically, more of the sales activities as well as customer service will be done without sales or customer service workers. As retailers and manufacturers electronically integrate their systems to inform each other of products, availability, and prices, more goods may be ordered and shipped directly from manufacturers to retailers. 

The increasing use of brokers and electronic business exchanges will limit growth in the numbers of sales and administrative workers. The work of sales workers also will change, both as the selling process becomes more automated and as customer service becomes more important. Work related to most of the sales that are not automated or transacted electronically will fall to inside sales workers. They will field calls and solicit new business by phone or over the Internet, and assist buyers with computerized purchases. However, more of outside sales workers’ responsibilities will involve complex customer service work, such as visiting customers to solicit new business and to maintain good relations, aiding with installation and maintenance, and advising on the most efficient use of purchases. 

Consolidation will continue due to globalization and cost pressures. International competition will heat up as domestic firms expand sales to other countries and as foreign firms export more to the United States, adding to the cost pressures on manufacturers. This should continue to force distributors to merge with other firms, or to acquire smaller firms. In addition, the largest retail operations will continue to grow, increasing the demand for large, national wholesale-distributor firms to supply them. But small, geographically isolated wholesalers may continue to form national alliances that will be more versatile in fulfilling customer orders. The differences between large and small firms will become more pronounced as they compete less for the same customers and emphasize their area of expertise. The resulting consolidation of wholesale trade among fewer, larger firms will reduce demand for some workers, as merged companies eliminate duplicated staff. At the same time, the expansion of customer services should increase demand for related workers. Office and administrative workers and sales workers will advance to many of these new customer service and marketing jobs. New workers with the necessary education and training will be needed for financial, logistical, or technical positions. Further automation of record keeping, ordering, and processing will result in slower growth for office and administrative support occupations, compared with most other wholesale trade occupations. Use of computerized labels with bar codes allows stock clerks with scanners to immediately record locations, quantities, and types of goods in a computerized inventory management system. Customers frequently order and pay for goods electronically through the Internet or other special systems. Therefore, fewer bookkeeping, accounting, and auditing clerks will be needed as fewer paper transactions are conducted. Despite this new technology, some office and administrative support workers will still be needed to oversee the process and make adjustments when problems occur. These workers will need to be proficient with new computerized systems.  

Earnings

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 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.

Like earnings, benefits vary widely from firm to firm. Some small firms offer few benefits. Benefits in larger firms include life insurance, partially or fully paid health insurance, and a pension. Other benefits may include profit sharing, savings or investment plans, and fully or partially paid dental insurance.

Only 5.6 percent of workers in the wholesale trade industry were union members or covered by union contracts in 2000, compared with 15 percent of the entire workforce.
 

Table 2. Median hourly earnings of the largest occupations in wholesale trade, 2000
Occupation	Wholesale trade, durable goods	Wholesale trade, nondurable goods	All industries
General and operations managers	$35.94	$31.46	$29.41
Sales representatives, wholesale and manufacturing, technical and scientific products	25.80	26.98	25.30
Sales representatives, wholesale and manufacturing, except technical and scientific products	19.98	18.66	19.40
Truck drivers, heavy and tractor-trailer	13.46	14.77	15.25
Customer service representatives	13.31	12.52	11.83
Bookkeeping, accounting, and auditing clerks	12.76	12.11	12.34
Shipping, receiving, and traffic clerks	10.85	10.81	10.52
Stock clerks and order fillers	10.16	9.72	8.75
Truck drivers, light or delivery services	9.86	10.98	10.74
Laborers and freight, stock, and material movers, hand	9.45	9.34	9.04

Source: Career Guide to Industries, Bureau of Labor Statistics

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