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Articles › Last-mile • Jun 5th 2025

The State of Wholesale Distribution

Wise Systems

Wise Systems

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Moving thousands of products from manufacturing plants to eCommerce and retail store shelves takes a lot of grit. Wholesale distributors specialize in handling the complex logistics required to support the growing demand for goods, from groceries to electronics. It’s no wonder why wholesale trade increased by 1.8% every year from 2018 to 2023.

Wholesale distribution might sound complex, but it’s the behind-the-scenes hero that keeps the wheels of commerce turning. From fueling your car to filling your fridge, wholesale distributors ensure the products you need are always available.

In this comprehensive guide, we’ll explain how wholesale distribution works and how experts expect this market to explode in growth in the next five years. While it’s sure to face its fair share of logistical challenges, upcoming trends and innovations promise to make wholesale distribution faster and more profitable than ever before.

In this article:

What Is Wholesale Distribution?

Trucks at a wholesale distribution center

Photo by Marcin Jozwiak from Unsplash

Wholesale distribution transfers goods from one vendor to another on a massive scale. Wholesalers buy products from manufacturers and then sell them to retailers, who then sell them to customers. Think of wholesalers as the middleman between manufacturers and stores.

Wholesalers are present in every product-based industry, whether it’s book publishing or stocking shelves at the grocery store. However, the most profitable wholesale products in the US are petroleum, groceries, and electronics.

Wholesale distribution offers plenty of benefits for both businesses and consumers, including:

  • Cost savings: Wholesalers can buy in bulk from manufacturers. Not only does this provide products to retailers more quickly, but it also keeps costs low. That’s a win for both retailers and their customers.
  • Variety: Wholesalers specialize in sourcing goods from a variety of manufacturers. This setup gives retailers a wider variety of products, which also benefits shoppers.
  • Scalability: There’s no need to build a supply chain from scratch. Wholesale distribution helps small businesses scale quickly by tapping into established supply networks.

The challenge is that wholesalers need a way to get their products from manufacturers to either a storage warehouse or to retailers. That’s where wholesale distribution comes in.

Distribution is a process wholesalers follow to transport goods from point A to point Z. There are lots of steps involved in wholesale logistics, so most wholesalers rely on specialized distribution software to cut costs, slash delivery timelines, and deliver on retailers’ high expectations.

Book a demo today to discover how the Wise Systems delivery automation platform can streamline your delivery operations.

Wholesale Distribution Market Size and Growth Potential

Semi truck bed

Photo by Bernd Dittrich from Unsplash

Globally, wholesale trade will be worth $53 trillion by the end of 2024. Experts project that the industry will be worth $61.7 trillion by 2027 — a compound annual growth rate (CAGR) of 7.1%.

Unsurprisingly, China has the largest wholesale market in the world, with a market size of 120 trillion yuan, or around $16 trillion USD, in 2022. However, wholesale trade is also big business in the United States. In 2020, the US wholesale market pulled in $8.5 trillion, which increased to $11.38 trillion in 2022.

There are over 400,000 wholesale distributors in the United States, but the biggest names in the industry are McKesson, AmerisourceBergen, Cardinal Health, and Sysco Corporation. On the retail side, Costco, Amazon, and Alibaba reign supreme in wholesale.

While every industry experiences natural growth and shrinkage, wholesale distribution is on the rise. On average, employment in wholesale trade increases by 17,000 positions per month to fill demand. The Producer Price Index (PPI) also decreased by 0.6% from June 2024 to July 2024, signaling a decrease in average prices for domestic sellers — an opportunity to see improved margins across the board.

Working in Wholesale Distribution

Delivery driver loading a van at a wholesale distribution center

Photo by Tima Miroshnichenko from Pexels

Wholesale trade employs 6.2 million people in the United States. The unemployment rate in this industry dropped from 3.6% in June 2024 to 1.6% in August 2024. There were over 161,000 hires in August 2024 for 180,000 job openings, so companies clearly can’t fill jobs fast enough to meet demand.

The majority of employees in wholesale trade work in sales, with over 822,000 workers. The second most popular position is in freight labor and logistics, with over 390,000 employees. Average earnings in August 2024 were $37.71 an hour, and employees work just under 40 hours a week on average.

Unions represent 5.1% of wholesale trade employees. That’s relatively small, but union representation is growing.

The Challenges of Wholesale Distribution

Wrapped pallets inside a wholesale distribution center

Photo by Tiger Lily from Pexels

Wholesale distribution is a growing industry, but it isn’t without challenges. Distributors have to tackle these issues to keep goods flowing with as few interruptions as possible.

Supply Chain Issues

As we saw with the COVID-19 pandemic, global issues can have a tremendous impact on the flow of goods. Natural disasters and geopolitical conflicts also hurt supply chains. The more wholesalers depend on suppliers worldwide, the more likely they are to experience supply chain issues.

Overcome these challenges by building a resilient organization that can stay flexible during a disruption. Data is your best resource here. The Wise Systems delivery automation platform gives wholesale distributors access to real-time tracking and predictive analytics to anticipate issues before there’s a problem. Book a demo today to learn more!

You can also minimize disruptions by not putting all of your eggs in one basket. Work with a variety of vendors to offset potential issues.

It’s also important to regularly communicate with these vendors and forge strong relationships. The better the line of communication, the more likely a supplier will notify you of potential upstream issues.

Labor Shortages

Nearly 20,000 jobs went unfilled in wholesale trade in the summer of 2024. That has a tangible impact on the industry’s productivity. Logistics, warehousing, and transportation skills are desperately needed, and many distributors struggle to find employees to meet this demand.

It isn’t easy to overcome labor shortages, but improving your staffing practices will enhance service quality and reduce operational costs. Robotics, automation, and AI-powered software can do a lot of the heavy lifting for you. You can also attract and retain more human employees by:

  • Offering better pay, time off, and benefits
  • Providing opportunities for advancement
  • Training your managers
  • Improving workplace safety
  • Creating a safe, positive workplace culture

Changing Customer Expectations

Wholesale distribution warehouse

Photo by CPG.IO eCommerce Execution from Unsplash

Both everyday consumers and retailers expect fast delivery and perfect accuracy. Short delivery windows help retailers make more sales, but it’s difficult to quickly route items through a complex logistical web in just 48 hours.

However, eCommerce is on the rise, and all shoppers expect their goods ASAP. Wholesale distributors are increasingly turning to last-mile delivery software and real-time tracking to meet customer demands. Some are also exploring partnerships with third-party logistics providers to streamline deliveries and improve customer satisfaction.

Increasing Costs

The PPI decreased from June to July 2024, but only by 0.6%. Prices generally trend upwards, making it harder for wholesale distributors to maintain their margins. Increasing fuel costs directly affect transportation costs, and labor shortages also lead to tighter margins.

Route optimization software is a must-have for reducing costs. Not only does it route your vehicles to the most efficient routes possible, but it also frees up your drivers and dispatchers to focus on more value-added tasks.

Discover how Route Planner from Wise Systems can help you minimize costs without sacrificing customer satisfaction. Request a demo today!

Aerial view of a wholesale distribution center dock area and building

Photo by Marcin Jozwiak from Unsplash

Wholesale distribution is steadily growing year over year. However, distributors still need to keep up with the latest trends and technologies to reduce costs and save even more time — especially as the industry becomes more competitive.

Integrating Artificial Intelligence (AI)

AI has been the talk of the town since ChatGPT’s release in 2022. While it might sound like a passing fad, AI has a lot to offer to wholesale distributors. It’s perfect for repetitive, low-value tasks for:

  • Order processing
  • Inventory management
  • Invoicing

Best of all, AI helps you complete these tasks faster and with fewer errors. Whether you use it to predict demand, optimize delivery routes, or improve customer service with a personalized chatbot, AI is the future of distribution.

You don’t need to hire expensive developers to embrace AI, either. Most distribution software includes AI. For example, Wise Systems optimizes last-mile logistics with continuous machine learning. Our AI-driven Dynamic Optimization Engine (DOE) ingests data to make real-time decisions that save time and money. (Want to learn more? Book a demo today!) It’s no wonder why the wholesale distribution software market will be worth $4.17 billion by 2027.

Investing in IoT

Did you know that 25% of wholesalers use Internet of Things (IoT) technology? An IoT setup makes it possible to track the exact location of your fleet in real time, monitor driver safety metrics, and much more.

IoT is already popular with product warehouses for tracking conditions and locations, but we predict it will become more popular in logistics. For example, connected telematics make it a cinch to improve efficiency, reduce losses, and keep your drivers safe.

Embracing Robotics

Robotics is still a new area for the wholesale industry, but it holds so much promise for distributors. For example, warehouse robots can manage picking, packing, and shipping at distribution centers. While the tech is still in its infancy, these bots can quickly move around the warehouse to reduce human error during the fulfillment process.

Not all distribution centers will benefit from robotics, but this technology is a huge time-saver for larger hubs. By integrating robotics into warehouse operations, wholesalers can reduce labor costs, improve safety, and speed up order processing.

Green Logistics

The transportation and logistics industry was responsible for 28% of all greenhouse gas emissions in 2022 — the most of any industry. While that number also includes consumer transportation, it highlights how much vehicles can damage the environment.

With consumers increasingly demanding green alternatives, wholesale distributors are under pressure to eco-fy their operations. In fact, experts predict companies will spend $350 billion on sustainable wholesale distribution by 2030 — or 15% of all logistics spend.

The good news is that going green is great for both the planet and your bank account. For example, Wise System’s route optimization solution maximizes fuel usage, cuts down on drive time, and speeds up delivery timelines. Aside from cutting fuel use, wholesale distributors can also become more green by:

  • Upgrading to electric vehicles (EVs)
  • Optimizing truck loads
  • Paying carbon offsets
  • Embracing eco-friendly solar or wind energy at your distribution center

eCommerce Focus

Many wholesalers specialize in moving products from a warehouse to a retailer. However, the soaring demand for eCommerce is leading to a measurable shift in distribution. In 2020, eCommerce made up 31% of all wholesale trade in the US. It’s no wonder why 72% of wholesalers believe eCommerce is a great growth opportunity.

Traditional retail requires dropping off lots of goods at fewer locations, but with more buyers shopping online, it’s crucial for distributors to focus more on last-mile delivery for eCommerce. eCommerce can easily quadruple the number of stops your team needs to make, which is why last-mile software is so crucial.

Wise Systems supports wholesale distributors with last-mile optimization, helping you dispatch, route, and communicate in less time. Request a demo today to learn how Wise Systems can transform your operations.

Future-Proof Wholesale Distribution with Wise Systems

Wholesale distribution is changing, and that’s a good thing. Distributors who keep up with new tools and processes will stay ahead of the curve.

From AI to last-mile eCommerce, the future of wholesale distribution is undeniably tech-driven. Wise Systems makes it a cinch to balance the complex logistics of moving products from manufacturers to retailers. Manage it all without breaking a sweat: Request a Wise Systems demo now to streamline your distribution processes.

Frequently Asked Questions

What are the biggest risks of wholesale distribution?

Supply chain disruptions, fuel costs, and labor shortages are big challenges for distribution. These issues can slow or even stop the flow of goods, delaying order fulfillment and hurting customer satisfaction.

How do wholesale distributors work with manufacturers and retailers?

Wholesalers act as a middleman between manufacturers and retailers. Distributors work closely with manufacturers to ensure a consistent flow of goods and may offer additional services like inventory management and marketing support to retailers.

Why does last-mile delivery matter for wholesale distribution?

Last-mile delivery is the most expensive and complicated part of logistics. With more people buying goods via eCommerce, distributors need to focus more heavily on last-mile logistics to meet retailers’ expectations for fast shipping and excellent service.

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