Less Risk When Going The Wholesaler Route

Expanding into new product sectors by purchasing through a wholesaler presents less risk than if a distributor was to buy direct from a manufacturer. By purchasing from wholesalers, distributors are able to purchase products without the large order minimums required by manufacturers. Distributors can get what they need as they need it without worrying about vendor minimums, which can be half- or full-truck amounts.

Ordering direct from the manufacturer will likely drive down per-unit pricing. The tradeoff, however, is meeting big minimums on untested products. That can be costly to a distributor if the products don't go over well with customers. The investment doesn't stop at the cost of buying into new lines, either. There is also the space needed to warehouse the items until they sell and the shipping costs for getting the products to the customer.

With a wholesaler, the same expansion presents less risk. A distributor can buy the new item only when it is ordered and purchasing on an as-needed basis lets the distributor grow demand for the new product before complete commitment.