Most of what we consume in Singapore is imported in some parts or in its entirety. Buying from the manufacturer directly is often not feasible as individuals do not enjoy economies of scale and have to pay a higher product cost and a shipping fee. This is where the essential middlemen come in. These businesses take the risk of importing products in bulk in anticipation of future sales. Risks include changes in price, spoilage and changes in demand.
Characteristics of Wholesalers
Wholesalers supply the merchandise to manufacturers, commercial and institutional clients for use in production, or to other wholesalers and retailers for resale. Wholesalers are the connecting link between the manufacturer and the retailer. Wholesalers obtain their goods directly from manufacturers in large quantities, thus reducing total physical distribution costs. They need a large amount of capital as they are required to stock sufficient quantities of items and offer credit to the retailers. They also need a good network of suppliers and reliable manufacturers to ensure timely delivery and high standard products.
Wholesalers sell in relatively smaller quantities. Therefore, they need to sort and repack the goods and sometimes re-brand them with their company name. Another function they perform is warehousing or storing the large stock of goods between the time produced to their consumption. They also provide distribution through bulk transport of goods to retailers.
The Wholesale Trade Index
Since 1995, the Department of Statistics has been compiling the quarterly Wholesale Trade Index (WTI) to measure the short-term performance of the wholesale trade sector. The Domestic WTI measures the quarterly trend of wholesale sales in Singapore, while the Foreign WTI measures that of wholesale sales outside Singapore, which comprises sales of off-shore merchandise, domestic exports, re-exports and transhipment cargo. The WTI captures the performance of 12 industries. Figure above shows the performance of foreign wholesale trade for 4Q2020. On a year-on-year basis, the Electronic Components and Telecommunications & Computers industries saw double digit growth in foreign sales of 33.5% and 30.0% respectively, due mainly to higher demand for semiconductor components and higher sales from new mobile phone launches.
More details of each industry will be provided over the next few articles.
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