Wholesalers do market management, and transfer of goods in the distribution chain from manufacturers to retailers. Businesses engaged in the wholesale trade have an intermediate place in the distribution chain, between producers and consumers of goods. The wholesale business runs around the incentive structure of discounted rate to buyers for large orders. Wholesalers tend to create long-term relationships with buyers by becoming regular suppliers to them.
The wholesale industry consists of durable, non durable goods in addition to wholesale trade agents & brokers. A few of the identified small scale wholesalers in the respective segments are A&K imports, Alabama wholesale socks, innomark communications.
Trend in wholesale/Distribution
* Wholesale distribution companies are likely to invest further and deeper in the endless capabilities that robust e-commerce strategy and platform can provide. Integrated e-commerce platforms provide valuable information to address challenges such as customer segmentation and pricing to reduce overhead costs & improve customer service.
* Mergers, acquisitions, and ownership transition are still occurring at a rapid pace within the wholesale distribution industry. The dynamics and competition created in this ever-changing environment has created a challenge for wholesalers to maintain market share and share of wallet.
* Wholesalers are increasingly implementing new supply chain management technologies that allow making data-driven business decisions and handling business operations centrally.
Automation and tracking technologies allows wholesalers to make more effective decisions and manage operations about shipping, staffing, and warehousing.
Multiple barriers exist in the wholesale/distribution industry which prevent it from occurring major Merger and Acquisition (M&A) activities, A few such identified issues are;
– Limited funding of SMEs – Larger M&A deals occur mostly in traditional way by utilizing internal funding (surplus cash) but it is difficult for small scale industries to involve in M&A activities due to limited funding sources
– Lack of M&A expertise – Smaller M&A deals does not have enough expertise in valuating benefits and risks associated with the deal. They often required an external business advisor to deal with the transaction and post-integration strategies for sustainable growth
– Limited sellers in Niche market – Wholesale distribution market serves different verticals thus making it as a niche market. Strategic buyers find it hard to source motivated sellers due to small target size.
Top players in the wholesale and distribution segment predict a high level of M&A activity for 2019. However, it can be a difficult process for small to medium enterprises (SMEs) to play a role in M&A deals due to lack of M&A expertise and regulatory restrictions. If you are a wholesale / distribution SME and are looking to exit your business, Keystone Business Advisors has the expertise and knowledge to manage the sale of your business. Keystone will analysis the industry and locates potential best-fit strategic buyers with the ultimate goal of maximizing the sales price and terms for your business.
Keystone Business Advisors is a Los Angeles-based Business Brokerage and sell-side M&A Advisory firm specializing representing small and medium wholesale and distribution businesses with revenues up to $50 million.
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