NAICS code for wholesale distribution: sector 42, and how to find your six-digit code

This page is for distributors filling in SAM.gov, a credit application, a supplier portal or a tax return, and for sellers building lists of distributors. It covers how the wholesale codes are organized, how to pick your six-digit code, the SIC equivalents, Census counts, the size standards and the rule that changes them for federal supply bids, and the largest public distributors.

What counts as wholesale

The Census Bureau's definition of sector 42 describes wholesalers as selling to other businesses "from a warehouse or office" with "little or no display of merchandise," premises not designed to attract walk-in traffic, and customers reached by phone, in-person sales or specialized advertising rather than advertising to the general public. Two kinds of business are in the sector:

1. Merchant wholesalers sell goods on their own account: distributors, jobbers, drop shippers and import or export merchants. Manufacturers' sales offices and branches that are separate from their plants are classified here too, as are group purchasing organizations that buy and sell on their own account.
2. Agents and brokers arrange purchases or sales of goods owned by others, generally for a commission: manufacturers' representatives, commission merchants, auction companies and business-to-business electronic markets.

Capital and durable nonconsumer goods used in production, such as farm machinery, medium and heavy trucks and industrial machinery, are always wholesale, even when sold one unit at a time.

The wholesale codes by product

Groups 4231 to 4239 are durable goods merchant wholesalers and 4241 to 4249 nondurable; each has several six-digit codes, so pick the one for the product line that brings in the most revenue. County Business Patterns figures for 2023:

Use the NAICS code lookup to find the six-digit code within a group, such as 423840 for industrial supplies or 424490 for specialty foods.

How to choose: the edge cases

The retail line is the hardest. The Census retail definition names building materials dealers, plumbing and electrical supply retailers and office supply retailers as retailers that also serve business customers; what makes them retail is a fixed location designed to attract walk-in customers, with displays and mass-media advertising. In 2022, NAICS merged the old business-to-business electronic markets code (425110) into 425120, so B2B marketplaces and brokers now share a code.

The SIC codes for wholesale trade

The 1987 SIC system puts wholesale trade in Division F: Major Group 50 for durable goods (5012 to 5099) and Major Group 51 for nondurable goods (5111 to 5199). There's no general "wholesale" SIC code; the catch-alls are 5099, Durable Goods, NEC, and 5199, Nondurable Goods, NEC.

SIC didn't separate agents and brokers. Each four-digit wholesale code includes them, so the Census concordance maps most SIC wholesale codes to two NAICS codes: a merchant wholesaler code and 425120. SIC 5075, Warm Air Heating and Air-Conditioning Equipment, for example, maps to 423730 and 425120. The SEC uses its own wholesale list with group codes such as 5000 (Wholesale-Durable Goods), 5090 and 5190.

How many wholesalers there are

County Business Patterns counted 382,081 wholesale establishments in 2023: 225,021 durable goods merchant wholesalers, 122,098 nondurable goods merchant wholesalers and 34,962 agents and brokers. They employed 6,236,357 people with $564.4 billion in annual payroll, about $90,500 per employee.

The top states are California (54,671), Texas (33,316), Florida (30,723), New York (26,515) and Illinois (15,961). CBP counts locations, so a distributor with 40 branches counts 40 times. It uses NAICS 2017 codes, where 425110 and 425120 were still separate (367 and 34,595 establishments).

Size standards, and the rule that overrides them

Wholesale size standards are measured in employees, averaged over the pay periods of the preceding 24 months and counting part-time and temporary staff (13 CFR 121.106). Across the 69 six-digit wholesale codes they run from 100 to 250 employees; 425120 is 125. These apply to SBA loans and other SBA programs.

Federal supply contracts work differently. The note to sector 42 in SBA's table says wholesale codes "shall not be used to classify Government acquisitions for supplies"; the agency uses the manufacturing code for the product, and a wholesaler bidding is a nonmanufacturer, "deemed small if it has 500 or fewer employees" and meets 13 CFR 121.406. That rule requires the distributor to normally sell the item, take ownership or possession of it, and supply the product of a small business manufacturer unless SBA has waived that.

The largest public distributors

EDGAR lists registrants by SEC code, such as 5000, 5122 and 5140. The largest by revenue, from their latest 10-K filings:

Drug distributors' revenue includes the full price of the medicines they pass through, which is why it dwarfs everyone else's. For the private distributors that make up most of the 382,081 locations, a Bebop search such as industrial supply distributors in Ohio with 50 to 200 employees and their own delivery fleet returns matching firms with the reason each fits.

Worked example

Illustrative example. The company and figures are invented.

Keystone Industrial Supply (keystone.example) distributes cutting tools, fasteners and safety products to factories. Its code is 423840, Industrial Supplies Merchant Wholesalers, and its SIC code is 5085.

Its headcount averaged 132 across the pay periods of the first year and 148 across the second: (132 + 148) / 2 = 140 employees. That's over the 125-employee standard for 423840, so Keystone isn't small for SBA loan purposes.

But when the Defense Logistics Agency solicits fasteners under 332722, Bolt, Nut, Screw, Rivet, and Washer Manufacturing, Keystone bids as a nonmanufacturer. At 140 employees it's under 500, so it's small for that set-aside, provided it supplies fasteners made by a small business manufacturer or SBA has waived the rule for that item.

Next step: compare the wholesale codes with the manufacturing codes that federal supply contracts use instead.