The History of Wholesalers and Small Businesses

Published on
February 11, 2022 at 11:24:23 AM PST February 11, 2022 at 11:24:23 AM PSTth, February 11, 2022 at 11:24:23 AM PST

Does your business currently work with a wholesaler to stock any of your products? Wholesalers are a great resource for many businesses both large and small. This wasn’t always the case, though. During periods like the Industrial Revolution, small and large businesses were at odds with each other, wholesale selling included.

Keep reading if you’re curious about the history of wholesalers and small businesses and how each industry changed and evolved to where they are today. Small businesses reach back to medieval times, so they’ve come a long way since early times.

What Is Wholesale Selling?

Wholesale selling is the act of selling products in bulk at a discounted rate to a third party, usually a retailer. Wholesalers mark these products down below retail price to leave room for the retailer to make a profit when they sell them to their customers at market value or higher. This is beneficial to both sides of the sale, as wholesalers can ship more of their product in bulk and the retailer still makes a profit. Wholesalers have fewer marketing costs than those who sell directly to the consumer and have more time and resources for marketing their own business. This modern agreement is prevalent in many of the stores we shop at daily, including online retailers.

Defining Small Business/Retail

Small businesses are a critical part of local economies and are the backbone of many small towns and municipalities. The U.S. Small Business Administration defines small businesses as businesses that have less than 1,500 employees. The amount of revenue that small businesses can make varies widely, ranging from one million dollars to forty million dollars annually. Small and large businesses alike often work with wholesalers due to the discounts that buying in bulk can offer them. For small businesses who need to save on costs everywhere they can, buying through wholesalers is a key strategy for making profits.

History of Small Business

Small businesses weren’t always connected to wholesale and its benefits as many are today. Wholesale saw a huge emergency during the Industrial Revolution of the 18th century, but small businesses have been around for centuries longer. In fact, when you travel back 500 years or more in history, you’ll discover that every business was indeed a small business. Some businesses had reputations of those we would identify as large businesses today, but entrepreneurs of old didn’t have the tools, equipment, and labor that we do today to support such large-scale businesses.

Earliest Wholesale and Small Business Examples

One stark change that started to swing businesses in the direction of larger conglomerates was the development of guilds in the medieval ages. Guilds offered qualified craftsmen an opportunity to band together and regulate competition. Guilds tended towards what we would call monopolies in today’s terms, though the main purpose of guilds was to keep up with competition. Almost any seller who wasn’t involved in a guild of some sort could be considered a small business. From carpenters, candlemakers, and blacksmiths to bakers and apothecaries, we can consider many professions of the time as small businesses.

Industrial Revolution

As briefly mentioned, the Industrial Revolution served as the spark for modern business practices, and we saw the start of what we can consider today as wholesale businesses. This is also the time when small businesses started to fall by the wayside in favor of big businesses. Small businesses and shops couldn’t compete with the might and size of factories and warehouses. These large establishments incorporated the technology of the time, which is when partial automation started to make its way into the limelight and streamlined many manufacturing processes. Europe and the United States were beginning to see more and more large factories like these replacing and filling in the space of small businesses.

How Did Small Businesses Survive?

Small businesses took a clear toll during the Industrial Revolution and beyond. However, small businesses started to move out of areas where these large businesses and factories were present to represent a smaller, more localized need. Small businesses were resilient, and while many didn’t survive the rapid business growth and technological advancements, they helped strengthen local areas much like they do today.

Advancements in Wholesale

While small businesses struggled to survive throughout the Industrial Revolution, this was the key turning point for the growth of future wholesale businesses. Partial automation technology and manpower paved the way for bulk manufacturing that we see today. The mass production of goods became more efficient and the ways of transporting them were changing as well. At the time, we developed faster ships for international shipping and better railroads and trains for national shipments. This meant we could transport more products at faster speeds and cheaper rates than ever before. During the 19th century, mail-order goods were beginning to grow in popularity, which paved the way for modern ecommerce methods that are so very prevalent today.

Modern Wholesale

The 20th century brought even more advancements to wholesale practices. New professions in the marketing and business consulting fields grew in popularity across many companies and businesses. However, the single biggest factor in the growth of wholesale was the development of the internet. Without the internet and ecommerce business, many wholesalers would have difficulty marketing and selling goods. The internet made marketing these types of services easy and accessible, and it made procuring goods even easier for the average consumer and business owner. This brings us full circle, back to modern times in which wholesale selling has become a crucial resource for many small and large businesses.

Now that you understand the history of wholesalers and small businesses, you can better understand the influences that both have had on each other. Buying wholesale is a great opportunity for any business. If you’re interested in shopping wholesale for your own business, start here at KBETHOS. We're a hat wholesaler who provides hundreds of different hat styles, colors, and sizes to our small and large business customers. Try adding some branded merchandise to your business with our wholesale hats, offering a clean slate for your creative branding inspiration!