What is the Definition of Wholesale Distribution?

Wholesale distribution is selling products or goods in bulk to retailers or other businesses—who then resell to frontline consumers. Wholesalers are a crucial link between manufacturers and retailers.

Wholesale distribution solutions improve the flow of products through the supply chain and save retailers the trouble of managing numerous manufacturer relationships.

Table of contents

Home > Blog > What is the Definition of Wholesale Distribution?

1. What is the role of a wholesale distributor?
2. Wholesale vs retail economics
3. What is wholesale distribution software?
4. Wholesale distribution and CRM software
5. Distribution management vs inventory management
6. Wholesale Distribution recent transformations
7. Why Surefront is the best wholesale distribution software

What is the role of a Wholesale Distributor?

Wholesale distributors have three key roles:

1. Inventory Management: Wholesalers maintain large inventories. These inventories include products from numerous manufacturers. The wholesaler maintains relationships with these manufacturers.
   
   
2. Purchase Streamlining: Wholesalers simplify the purchasing process for retailers by consolidating products from various manufacturers. This lets retailers access a wide variety of products from a single distributor.
   
   
3. Value-Added Services: Distributors often provide additional services such as vendor management, sales management, warehouse management, and transportation logistics, helping retailers optimize their operations and increase profitability.

Wholesale distribution makes retailer’s lives easier. It allows retailers to focus on moving merchandise instead of spending time managing the complexities of product development and manufacturing. 

Retailers may still concept, design, and manufacture new products, but often they’ll fill out inventories with wholesale goods.

The flow of wholesale distribution

Wholesale distribution facilitates the supply chain. It ensures the movement of goods from factories to retailers and ultimately to consumers. The process involves several key steps and parties:

1. Raw Materials: Supplied by raw material suppliers to factories or manufacturers. Wholesalers will have a say in the materials they want for products.
   
   
2. Manufacturing: Products are created in factories, transforming raw materials into finished goods. Wholesalers manage product development with manufacturers.
   
   
3. Transportation: The wholesaler will order products from a manufacturer which will be completed and transported from factories to ports using ocean containers.
   
   
4. Warehousing: Goods are unloaded at warehouses near the port, where they are palletized and prepared for further distribution.
   
   
5. Distribution Centers: Goods may then be sent to retail distribution centers. This is the last step for the wholesaler.
   
   
6. Retail Stores: Products are delivered to retail stores or directly to consumers in the case of e-commerce.

You can see the importance of the wholesale distributor throughout this whole process. It’s a series of complex tasks that most retailers would rather avoid. 

Additional wholesale roles

A wholesale distributor may also provide additional services to enhance efficiency. These services include: 

• Inventory management
• Vendor management
• Sales management
• Warehouse management 
• Transportation logistics

Distributors offer these services to help retailers optimize operations and increase profitability. Their main value-add is expertise in supply chains, project management, and infrastructure.

Wholesale industries

The wholesale distribution sector encompasses several retail industries:

• Consumer goods
• Fashion
• Electronics 
• Pharmaceuticals 
• Automotive parts 
• And more

Distributors track the unique market demands of their chosen industries so they can provide a catalog of products that retailers can leverage for consumer sales.

Wholesale vs retail economics

The table below shows the margins that wholesalers and retailers need to make to turn a healthy profit:

What is wholesale distribution software?

Many wholesalers use wholesale distribution software (aka distribution management or wholesale management software). Wholesalers need specialized software systems designed to optimize supply chain processes.

The three most common wholesale software types

The complexity of the wholesale process allows for a variety of streamlining tools. Surefront offers a collaboration platform that combines three core wholesale software solutions:

• Product Lifecycle Management (PLM): This technology helps manage the lifecycle of a product from initial concept through design and manufacturing. Wholesalers use PLM software to improve product collaboration with suppliers and manufacturers.
  
  Surefront’s PLM is designed to be a collaborative product platform where retailers and manufacturers can send messages about product specs and details. It eliminates the inefficiencies of email and spreadsheets in favor of a single source of truth between external and internal business parties.
  
  The PLM includes vendor management tools, supply chain transparency features, and a tech pack generator.
  
  
• Wholesale Customer Relationship Management (CRM): This system manages relationships between retail buyers and wholesale sellers.
  
  Surefront’s CRM offers custom downloads of key industry documents including purchase order worksheets, line sheets, and RFQs. Additionally, the CRM can be used to process business transactions.
  
  
• Product Information Management (PIM): This technology helps manage and centralize product information, ensuring data accuracy and consistency across all channels.
  
  Surefront’s PIM serves as a catalog management and product syndication tool. 

The combination of PLM, PIM, and CRM gives wholesalers a complete solution for optimizing supply chain speeds. Most clients double their speed-to-market after just a year of using Surefront.

Additional technologies

These are a few technologies commonly used by wholesalers that Surefront does not offer.

• Warehouse Management Systems (WMS): These systems help manage and optimize warehouse operations, including inventory tracking, picking, packing, and shipping.
• Transportation Management Systems (TMS): These are used by third-party logistics providers to manage transportation operations, including route planning, carrier selection, and freight auditing.
• Enterprise Resource Planning (ERP): This software helps businesses manage their core processes, including financials, supply chain, manufacturing, and human resources.

Most wholesale distributors are looking for built-in inventory management. This tool lets distributors control inventory levels and costs, monitor stock movements, and automate replenishment and distribution.

When distributors have accurate insight into their stock availability, it reduces the risk of stockouts or excess inventory. Efficiently managing inventory helps distributors minimize carrying costs, optimize order fulfillment, and enhance consumer satisfaction.

A list of auxiliary solutions

Sales and Order Management

1. Customer Order Management: Allows distributors to manage customer orders within a centralized system.
2. Sales Order Tracking: Tracks sales orders and transactions to ensure accurate order processing.
3. Order Fulfillment: Streamlines the order fulfillment process for efficiency.
4. Quote Generation: Enables the generation of quotes for potential sales.
5. Order Processing: Facilitates the processing of orders from receipt to delivery.
6. Customer Account Management: Manages customer accounts, including their order history and preferences.

Purchasing and Supplier Management

1. Procurement Process Tracking: Tracks the procurement process from order to delivery.
2. Transaction History: Allows viewing of complete transaction histories with suppliers.
3. Automated Purchase Orders: Automates purchase orders based on inventory levels.
4. Reorder Point Setting: Enables setting reorder points to maintain optimal inventory levels.
5. Vendor Performance Management: Manages and evaluates vendor performance to negotiate better terms.

Financial Management

1. Revenue Tracking: Tracks revenue from sales and other income streams.
2. Expense Tracking: Monitors expenses to ensure financial control.
3. Payment Processing: Manages the processing of payments to and from customers and suppliers.
4. Project Accounting: Tracks financials related to specific projects or initiatives.
5. Cash Flow Management: Monitors cash flow to ensure financial stability.
6. Billing Automation: Automates the billing process to reduce manual effort and errors.
7. Financial Reporting: Generates financial statements and reports to inform business decisions.

Does wholesale distribution software help with customer relationship management?

Wholesale distribution software plays a crucial role in B2B customer relationship management (CRM).

Here are five ways in which software for wholesale also supports CRM:

1. Centralized customer database:

Wholesale distribution software usually offers a centralized customer database that distributors can use to store and manage all of their customer-related data.

This database gives distributors a holistic view of each and every customer, including: their contact details, purchase history, preferences, and all additional notes on interactions.

With this information readily available, distributors can personalize their interactions with customers to provide better customer service and address their needs more effectively.

2. Order and sales tracking:

Wholesale distribution software lets distributors track customer orders and sales transactions in real-time. This provides visibility into the status of orders, including order processing, fulfillment, and shipping. Distributors can then easily access their order history and track the progress of each order.

Like with ERP solutions, wholesale software's order and sales tracking ensures timely order delivery. It also allows wholesalers to quickly resolve any issues that arise.

With a clear understanding of customers' purchase patterns and preferences, distributors can proactively anticipate their needs to provide a tailored and exemplary B2B experience.

3. Customer communication and engagement:

Wholesale distribution software usually comes equipped with communication tools or CRM features –– such as email integration or built-in messaging systems. These tools let them contact customers in an efficient and effective way.

Distributors can then send order updates, delivery notifications, promotional offers, and other relevant information directly to their customers. These communication features help distributors stay connected with their customers, enhance engagement, and build stronger relationships.

4. CRM integration:

Many wholesale distribution solutions have integration capabilities with dedicated CRM systems, or they offer CRM functionality within their own modular solution. This allows distributors to synchronize customer data between their wholesale distribution software and the CRM system.

Integrating CRM functionalities helps distributors leverage advanced CRM tools for managing leads, tracking customer interactions, creating marketing campaigns, and analyzing customer behavior. It often comes equipped with a sales analysis tool for better decision-making and sales processes.

This integration ensures a comprehensive approach to CRM, enabling distributors to capture, analyze, and act upon customer data effectively.

5. Analytics and reporting:

Wholesale distribution software usually comes equipped with robust reporting and analytics capabilities. These features give distributors valuable insights into customer behavior, purchasing patterns, and overall sales performance.

By analyzing customer data, distributors can identify trends, segment customers based on specific criteria, and develop targeted marketing strategies.

This data-driven approach helps distributors better understand their customers, make informed decisions, and implement effective CRM strategies to improve customer sentiment and loyalty.

The best wholesale distribution software supports CRM by providing a centralized customer database, order and sales tracking, and communication tools for customer management.

Medium sized wholesale companies should look for integrations with existing CRM systems and analytics capabilities to help them scale.

By leveraging these features, distributors can enhance customer relationships, deliver personalized experiences, and drive customer satisfaction and loyalty.

Distribution management software VS an inventory management system

Distribution management and inventory management systems are two distinct supply chain management solutions, yet they're interconnected in a few aspects.

Distribution management systems are focused on getting the products to consumers, while inventory management systems are focused on monitoring inventory.

Here's a comparison of the two:

Purpose and scope:

Distribution management software manages the overall distribution process. This includes activities like order management, sales process management, customer relationship management (CRM), and logistics.

It encompasses a broader range of functionalities that streamline the movement of goods from manufacturers to retailers or end consumers.

An inventory management system, on the other hand, focuses specifically on optimizing the management of inventory levels, tracking stock movements, and ensuring the availability of goods through supply chain management. It usually has a built in warehouse management system.

IMS primarily revolves around inventory control, forecasting, and replenishment strategies.

Functionality:

Distribution management systems have tools for managing the entire distribution network, overseeing sales operations, tracking orders, and coordinating logistics. They facilitate key activities like order processing, route planning, warehouse management, and transportation optimization.

They also include features for managing consumer relationships, such as customer database management, vendor relationship management, communication tools, and sales analytics.

Inventory software, on the other hand, focuses on inventory control with functions like: stock tracking, inventory valuation, reorder point calculations, and safety stock management.

Integration and collaboration:

Distribution management software often integrates with various systems, such as CRM software, ERP software, VRM software, and warehouse management systems (WMS).

These integrations enable seamless data flow, collaboration, and process synchronization across all of the various departments and stakeholders involved in the distribution process.

Sometimes inventory software also integrates with these systems. However, its main focus is on synchronizing inventory data with other related processes, such as sales, procurement, and production, to ensure accurate inventory tracking and decision-making.

Customer focus:

Distribution management software emphasizes customer relationship management and sales operations. It provides tools to manage customer accounts, track sales transactions, and deliver better customer service. So distributors can enhance consumer satisfaction, increase sales, and strengthen customer loyalty.

While inventory management software indirectly impacts consumer satisfaction by ensuring product availability, its primary objective is actually to optimize inventory levels, reduce carrying costs, and improve operational efficiency.

Effective inventory processes are essential for successful distribution management. Without proper inventory control, accurate forecasting, and timely replenishment, distribution can suffer from stockouts, delays, and lost sales opportunities.

Distribution management software and inventory management are interdependent solutions. Distribution management software manages the entire distribution process, including order management, logistics, and consumer relationships.

Inventory software, on the other hand, helps wholesalers optimize inventory levels, track stock movements, and ensure product availability. The two solutions have different scopes and functionalities, but they're interconnected. Both are crucial for effective distribution and demand management.

Transformation in the wholesale distribution industry

The wholesale distribution industry is undergoing a significant transformation driven by factors such as technological advancements, evolving customer expectations, the redefinition of important business processes, and evolving market dynamics.

Here are three key aspects of the transformation in wholesale distribution:

1. Digitalization and E-commerce:

The rise of digital technologies has revolutionized the wholesale distribution landscape. Wholesale distributors are embracing online channels to reach a wider customer base, provide self-service options, and enable seamless ordering and fulfillment processes.

Digital platforms offer opportunities for data-driven insights, personalized marketing, and real-time inventory visibility to enhance both operational efficiency and customer experiences.

2. Supply chain optimization:

Distributors are reevaluating their supply chain strategies to improve their efficiency and responsiveness. Advanced technologies such as AI, machine learning, and IoT can facilitate this journey.

These innovations allow distributors to aid B2B customers with real-time tracking and monitoring of inventory, predictive demand forecasting, and optimized routing and logistics.

Distributors can leverage technological advancements to reduce costs and optimize delivery routes. The result? Faster order fulfillment and improved customer satisfaction.

3. Value-added services and solution selling:

Wholesale distributors are expanding their offerings beyond product distribution by providing additional services and solutions.

They are becoming trusted partners and consultants, drawing upon their retail experience to offer expertise in areas such as optimizing inventory levels, supply chain management, and product knowledge.

By leveraging their industry expertise in tandem with data-driven insights, distributors can provide customized solutions to address specific customer challenges, ultimately helping customers drive their own business growth.

Embracing technology will be a critical KPI for distributors as the wholesale business continues to evolve. By focusing on customer needs and adapting to changing market dynamics, distributors can achieve long term success in the ever-changing wholesale distribution landscape.

Why is Surefront the best wholesale distribution software?

You don't want to pay for features you won't use. That's why a cloud ERP isn't the right solution for every unique wholesale business. The best wholesale distribution system streamlines a robust set of features that align with your specific business needs.

This may include managing inventory, order processing, CRM, analytics, integration capabilities, subscription management and more.

Surefront is the best wholesale distribution software, as we offer fully customizable functionalities. With Surefront, you can address the unique requirements of your essential business processes to achieve operational excellence in a fraction of the time.

Let's talk unification

You don’t want your data to be siloed. Your company’s PIM, CRM, and PLM solutions shouldn’t operate in a vacuum, either. Surefront is a Unified Product Collaboration Platform to power growth and ROI.

Our patented PIM, CRM, and PLM solutions streamline the omnichannel sales, merchandising, and product development processes.

By combining these essential functionalities, Surefront creates a single source of truth throughout your product lifecycle, sales, and listing processes. 

The results? Up to 150% more revenue per employee and a 40% shorter product development cycle is just the beginning. Try our 10x ROI calculator to see your company’s potential profits.

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