Insights into the household appliance wholesale market
This is a sector that has experienced a challenging last five years. With the rise of e-commerce consumers have put pressure on retailers, which has had implications across the supply chain. Is the future expected to be any brighter for the 700+ wholesale businesses across Australia?
Household appliances cover quite a range of brown and white goods, from TVs, sewing machines to floor polishers and air conditioners. The majority of the revenue comes from brown goods. Whether large or small, many items are manufactured overseas under the dominance of two large Asian companies and Electrolux from Europe.
The majority of wholesaling businesses are Australian-based, importing applicances and electronics from overseas. The geographical split is biased towards NSW and VIC. Wholesalers are distributing across a range of retailers including pharmacies and residential construction companies.
As well as the rise of online, retailers have moved to source directly from manufacturers. This has driven down prices amongst wholesalers and in some cases put small companies out of business. Other impacts on the sector have included currency fluctuations, consumer confidence in general and housing market in new builds.
For a brighter future the following success factors have been identified
- Access to well known brand manufacturers who are reliable. With new technologies being applied to many white goods, this innovation is expected to drive increased demand.
- Good stock control, with computerised inventory analysis
- A wide range of goods as this attracts larger retailers
- Efficient warehouse and distribution system
- An excellent after sales service including repairs
Future revenue growth is forecast at 1.8% for the next five years. Growth is predicted, not from more businesses entering the sector, but smarter deployment of the success factors above. Employee growth will be relatively static as automation increases. Wages overall rise slightly per head reflecting investment in talented staff.
* Source: IBISworld Household Appliance Wholesaling
How can Classic Funding Group help
This wholesale sector are heavy importers and as such need capital to buy goods, and with pricing becoming more competitive, businesses need to drive the best deals from the manufacturers and hedge risk around currency fluctuations. Putting a trade finance facility in place can help with covering the payment gap from supplier to sale.
Whilst the industry has already invested in assets such as delivery vehicles, automation and storage, depreciation costs are now increasing on these assets.
Should a wholesaler need a cash boost these assets can be sold and leased back. This keeps the asset in the business but also provides capital for either new orders or payment of ATO debt or business expansion.
For broader help with cash flow a full debtor finance facility can be put in place where a wide range of suppliers are being used.