Considering it is a six-trillion-dollar sector that has consistently been growing nearly 20 percent to 50 percent faster than the rest of the economy, wholesale distribution doesn't seem to get its share of respect or attention, especially compared to other "more exciting" sectors such as high-tech, biotech, or even retail. Granted it is overall a relatively low-margin and mature business, but boring it is not. Wholesale distribution is a vibrant sector with a lot of innovations, changes and competitive battles going on. Since WD spans across the whole economy (there is a WD slice in virtually all industries), it is worth understanding these dynamics.

What is Driving the Growth?

Globalization/New Markets-Manufacturers are going after more and more global markets around the world. They can't afford to have sales and service people everywhere, so they are increasingly relying on WDs to represent them and provide a presence in new markets. It is a lower-cost way to get into new markets.

Services-WDs have been aggressively building their service businesses to build differentiation, higher margins and loyalty. As they stretch the boundaries of what they do, WDs end up clashing and competing with system integrators, service and repair businesses, 3PLs, contract manufacturers, and even software and business information companies, to name a few.

Selling Direct-WDs have figured out ways to sell direct without alienating their retail customers. The volumes of their online and retail businesses are growing.

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