A business-to-business (B2B) wholesale distributor refers to a business that moves products through the supply chain by purchasing from manufacturers and selling to retailers, other manufacturers, or assemblers. Typically, a B2B wholesale distributor does not sell to the end consumer. B2B wholesalers often specialize in a particular industry or in closeouts, and they frequently offer advantages to the business that form partnerships with them.
When a B2B wholesale distributor specializes in an industry, such as automotive parts, clothing, or furniture, the distributor may be able to purchase larger volumes and gain volume discounts. The distributor also develops relationships and gains expertise in B2B sales. These factors can result in system efficiencies and reduced costs. Customers may find they are able to obtain lower prices and better service by going through the B2B distributor compared to purchasing directly from the manufacturer.
The original manufacturer can also benefit from the system efficiencies of selling to a few select, large wholesale distributors rather than numerous small customers. In these situations, the manufacturer or supplier may choose to sell only to B2B distributors. Customers of these goods have no choice but to purchase through the distributor.
Customers may wish to develop a long-term partnership with their B2B suppliers. Ideally, the B2B wholesalers will be well-established in the industry, with strong relationships with manufacturers. This can be helpful when product shortages arise, and the manufacturer will tend to ensure it provides product to the companies with which it has solid relationships.
The product mix offered by the B2B supplier is important. A wholesaler should have a range of products that fit the needs of the customer. Along with product mix, pricing is a crucial factor. For retail customers, the B2B wholesaler’s prices must be low enough that the customer can resell and still be profitable. The customer may find it much more pleasant to work with a B2B wholesale supplier that is responsive, so customer service is another important consideration.
A special form of specialization is the B2B closeout. This type of B2B wholesale business does not specialize in an industry. Instead, it specializes in finding situations where a company is eliminating a line of products and wishes to move them quickly, usually for substantial price reductions. The wholesale distributor in this case often sells to retailers who specialize in these types of sales. Customers do not expect to find the same goods over time, and instead they expect to buy an ever-changing assortment of items at very low prices.
