What is Wholesale Trade?
Wholesale trade involves the sale of goods or merchandise to retailers, industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services. This sector encompasses entities that are involved in bulk distribution of commodities.
In other words, wholesale traders typically operate in a business-to-business (B2B) context, selling goods in large quantities to retailers or other businesses, who then sell those goods directly to consumers or use them as inputs in their own products or services.
A key aspect of wholesale trade is that it does not typically involve direct transactions with end consumers. Wholesalers act as intermediaries between manufacturers (who produce the goods) and retailers (who sell the goods to consumers). They buy goods in large quantities from manufacturers, store them in warehouses, and then sell them to retailers in smaller quantities.
Wholesalers add value to the supply chain by performing functions such as:
- Breaking Bulk: Wholesalers purchase large quantities of goods from manufacturers and sell them in smaller quantities to retailers, making the goods more accessible for retail businesses.
- Storage and Inventory Management: Wholesalers hold and manage inventory, reducing the need for retailers and other businesses to maintain large storage facilities.
- Transportation: Wholesalers often deliver goods to retailers, reducing the logistical burden on manufacturers and retailers.
- Market Information: Wholesalers often have extensive knowledge of market conditions and trends, which can be useful to both manufacturers and retailers.
- Risk Bearing: Wholesalers bear the risk associated with holding inventory, such as damage, theft, or changes in market demand.
The role of wholesale trade is to facilitate the distribution of goods within the economy, making it easier and more efficient for goods to move from producers to consumers.
What is Wholesale Trade’s Role in the Space Economy?
In the context of the space economy, Wholesale trade is responsible for distribution of space-related products such as satellite phones, ground segment equipment, and components used in other products (such as GPS receivers used in mobile phones).
Wholesale trade margins, or markups, reflect the value added by wholesalers in the distribution of space-related products from producers to purchasers. Wholesale trade output is margin based (sales less the costs of goods sold) instead of purely sales based, meaning wholesale trade values reflect margins received and do not necessarily reflect trends in sales.