wholesale-examples

Wholesale Examples In A Nutshell

A wholesale business purchases goods in bulk from a supplier and then sells them to other merchants in smaller quantities. The wholesaler relies on economies of scale to make a profit. Most wholesale businesses do not sell to the end-user. However, two exceptions are commodities trader Trafigura and big-box retailer Costco. Sysco is the largest wholesale foodservice distributor in the United States while McKesson Corporation is the largest distributor of pharmaceutical drugs and various other healthcare products and technology.

Introduction

A wholesale business purchases goods in bulk from a supplier and then sells them to other merchants in smaller quantities. The wholesaler relies on economies of scale to receive a discount price from the manufacturer and then adds mark-up before selling to the merchant. Most merchants are not the end-user of the product, but as we will discover later, there are exceptions to this rule.

Wholesalers play an important role in the market. They maintain supply-demand equilibrium by storing goods until there is merchant demand. What’s more, a wholesaler is responsible for the distribution and transportation of goods from their warehouse and bears the risks associated with product shrinkage or fluctuations in demand.

The rest of this article will be devoted to discussing some specific wholesale business examples.

Costco

costco-business-model
With a substantial part of its business focused on selling merchandise at the low profit-margin, Costco also has about fifty million members that each year guarantee to the company over $2.8 billion in steady income at high-profit margins. Costco uses a single-step distribution strategy to sell its inventory.

Costco, also known as Costco Wholesale Corporation, is an American multinational big-box retail chain founded by James Sinegal, Jeffrey Brotman, Sol Price, and Robert Price in 1976.

Costco is a membership-only warehouse that requires consumers to purchase a membership before they can shop. The company is somewhat unusual in that it is a retailer and a wholesaler at the same time. In other words, Costco purchases wholesale products from the manufacturer and sells them to the end-user. However, the company also sells the same goods to other businesses under a more traditional wholesale business model.

Trafigura

Trafigura is a Singaporean commodity wholesaler that was established in 1993. The company sources raw commodities from miners and fossil fuel producers and, like Costco, supplies end-users which include power plants, construction companies, and state governments.

Despite only existing for approximately 30 years, Trafigura is the largest private metals trader in the world with total revenue for 2021 of $231.3 billion.

Sysco

Sysco Corporation is an American multinational involved in the wholesale distribution of kitchen equipment, food products, and tabletop items to restaurants, schools, and health facilities. The company also distributes products to hotels and other food services companies such as Sodexo and Aramark.

Sysco is the largest wholesale foodservice distributor in the United States with over 600,000 clients in 90 countries.

Toyota Tsusho

Toyota Tsusho is a trading arm of the Toyota Group of companies. The corporation’s primary function is to support Toyota’s automotive division and supply other vehicle manufacturers with wholesale parts.

However, Toyota Tsusho is a vast company with additional interests in metals, machinery, energy, chemicals, electronics, food and customer service, and logistics.

McKesson Corporation

McKesson Corporation is the largest distributor of pharmaceutical drugs, healthcare technology, care management devices, and medical supplies in North America. 

The corporation distributes 33% of all pharmaceuticals across the continent with the company reporting full-year revenue of $238.2 billion in May 2021.

Read Next: Wholesale Business Model.

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Read Also: Costco Business Model

who-owns-costco
Costco runs a high-quality, low-priced business model powered by its memberships that draw customers’ loyalty and repeat purchases. Top institutional investors comprise The Vanguard Group, with 8.55%, and BlackRock with 5.39%. Top individual shareholders comprise Craig Jelinek, Charles T. Munger (Warren Buffet partner and co-owner of Berkshire Hathaway), James Murphy, and more.

Read Also: Marketplace Business Models

marketplace-business-models
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

Read Also: Food-Delivery Business Models

food-delivery-business-model
In the food delivery business model companies leverage technology to build platforms that enable users to have the food delivered at home. This business model usually is set up as a platform and multi-sided marketplace, where the food delivery company makes money by charging commissions to the restaurant and to the customer.
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