Companies in this sector distribute nondurable or durable goods, typically specializing by product category. Major US distributors include Avnet (electronics), McKesson (drugs), and SYSCO (foods); top companies based outside the US include Brenntag (Germany, chemicals), Medipal (Japan, drug and household products), and WPG (Taiwan, electronic components).
The wholesale distribution industry in the US includes about 420,000 establishments (single-location companies and units of multi-location companies) with combined annual sales of more than $8 trillion.
For most distributors, demand is closely linked to local economic activity. The profitability of individual companies depends on efficient inventory management and order fulfillment operations. Large companies can supply customers with a wider range of goods and in more markets, but smaller distributors can compete successfully by carrying specialty products or providing add-on services. In the US, the industry is highly fragmented: the 50 largest distributors generate about 25% of industry revenue.
Computer and communications technology have had a major effect on the industry by improving the efficiency of warehouse and distribution operations. Largely because of automation, industry labor productivity improved by about 10% between 2005 and 2015.
Supply chain efficiencies allow some manufacturers and retailers to bypass independent distributors. Large retailers like Wal-Mart operate their own distribution systems, often taking delivery of products directly from producers.
Imports have become a more important source of supply for distributors, as more US manufacturers have foreign factories, and as more foreign-produced goods have cost advantages over US-made products....