Final Report

Wholesale industry

Edwaurdo King

November 8, 2018

Dr. B. West

Strayer University

Introduction

Wholesale industry is one of the sectors that ensures that goods from the producers reach to the intended consumers either directly or through the retailers. The industry deals in a variety of consumer goods and services (college grad, 2018). The industry is responsible for the transfer of the required products from the manufacturers to the consumers without making any change in the content or outlook of the products.

Industry Goods and Services

The industry deals with goods such as agricultural products, manufactured goods, and capital goods. The wholesalers use the warehouses as their main offices as they contact their clients to inform them of the available products. The role of the industry is to gather the finished products from different sectors for ease of collection by the retailers from their warehouses. The industry reduces the distance between the producers and consumers (college grad, 2018).

Market Structure and Characteristics

The capital requirement for the industry is enormous thus limiting the number of firms and individuals who can operate in the industry. There is stiff competition in the industry caused by the desire of individual firms to increase their sales volume (Fischer, 2018). The high cost of initial capital discourages the new entrant into the market, therefore, helping in maintaining a low number of firms in the market. Other factors such as product promotion, discounts, and bonuses are used to attract customers to give a difference between the companies. The characteristic in the market shows that the industry operates in an oligopoly market structure (Fischer, 2018).

The wholesale industry lack uniformity of the firms. There are different sizes of the firm in the industry because of the various products they sell. The size of the company is determined the amount of money invested and its level of trade in the market. Other firms are enormous while others are relatively small but operate in the same market (Fischer, 2018).

Microeconomic Relationships, Market Outcomes, and/or Trends

The industry has witnessed several changes in sales volume and the employment rate. The increase in sales in the wholesale sector is as a result of their fair prices compared to the prices offered by the retail trade industry. The number of employment opportunities has been in the rise for the past four months because of the expansion of the industry and improvement regarding trade (Wholesale Trade: NAICS 42, 2018). The number of job opportunities had increased from 5.8 billion in July 2018 to 6 billion in October 2018. The industry has an increasing earning rate from 3.3% in 2014 to 4.5% in 2017. The industry continues to attract more investor because of its rate of return on the investments. (Wholesale Trade: NAICS 42, 2018). Most of the firm has invested in technology that allows their customers to shop and pay online to reduce the traveling expenses. The increased use of technology has reduced the time spent on acquiring goods from the wholesaler to the client and payment by the customers to the wholesalers

How Government Intervention May Impact the Industry

The intention of the US government to lower the trade tariff to 1.61 would make industry realize an increased number of foreign investors because of the favorable conditions (Babones, 2018). The governments get 50% of its revenue from trade; therefore, the reduction of the trade tariffs aim at generating more income. The abandoning of the protectionist policy by countries such as China would help in the expansion of the industry in Asian states by the foreign investors thus creating more job opportunities in various countries. The government can set the number of companies to be registered within the company thus controlling the level of competition within the industry (Babones, 2018). The higher the number of registered companies the higher the level of competition to the benefit of the customers

References

Babones, S. (2018). Trump's Tariffs Are About Opening Markets, Not Closing Them. Retrieved from https://nationalinterest.org/feature/trumps-tariffs-are-about-opening-markets-not-closing-them-26331

Fischer, C. (2018). Market Structure. Retrieved from https://www.westga.edu/~bquest/1997/ecnmkt.html

College grad. (2018). Wholesale Trade Industry: Career, Outlook and Education Information. Retrieved from https://collegegrad.com/industries/wholesale-trade

Wholesale Trade: NAICS 42. (2018). Industries at a Glance: Wholesale Trade: NAICS 42. Retrieved from https://www.bls.gov/iag/tgs/iag42.htm