Distribution is the process of purchasing, storing, and distributing products when required. Wholesale distribution is the process of purchasing the products directly from the suppliers or manufacturers and reselling them to the retailers without transforming them in any way. They products are stored in warehouses and sold when there is a demand.

Many wholesale distributors assemble, sort, pack and sell the goods they offer. This is called bulk breaking. The warehouse infrastructure requirement is based on the type of products stored. For example, pharmaceutical products require the products to be maintained at a certain temperature and wholesale distributors of pharmaceutical products must have a facility for refrigeration.

Apart from saving money for their customers, wholesale distributors reduce risks to suppliers and customers by maintaining inventories. Their other functions include quick delivery, financing customers through credits, supplying information about the market to the manufacturers, and bearing risks by absorbing the costs of damage.

Wholesale distributors choose their target market. They then find profitable customers and build strong relationships with them. They decide the inventory and maintain sufficient stock for immediate delivery. The goods are purchased in bulk and hence the wholesalers pay low prices. Then they mark them up by a percentage. The wholesalers also promote their products apart from deciding the location of distribution. They sometimes promote their products using the reputation of their suppliers.

Over the last ten years, the wholesale industry in US has accounted for one quarter of the productivity improvements in the economy. Some wholesale distributors also offer drop ship facilities. Drop shipping involves shipping the products directly to the end customers. This allows retailers to get products at wholesale prices and focus their efforts on selling their products without worrying about logistics.