Are You Ready for Wholesale? 7 Ways to Know if You’re Prepared
Expanding into wholesale trade can be a very challenging decision for a company. Providing goods for wholesale is a big move that has many factors to contemplate. Who will be responsible for selling your products? Will your business be able to manage the amount of output? What will be your profit margins? The task can be daunting, particularly for newly established companies! We have created a list of the top seven factors to contemplate when considering entering into retail sales and wholesale to provide assistance. While keeping in mind that each business situation varies, utilize these recommendations as a guideline. Ultimately, make decisions that are optimal for your individual circumstance.
1. Consider Your Products
The suggestion being made may appear unusual. It appears that you already possess items, so why bother contemplating it? Initially, ponder over what you offer. Is it something that other vendors might be keen to offer to their clientele, something that they can incorporate into their current merchandise offerings? Is your line of products uniform enough to lure in traders? These are all concerns you should be inquiring about when toying with the idea of entering the wholesale sector. It is your items that will be the main attraction. Consider what sets your products apart and incorporate that into your selling strategy when discussing with vendors or selling in bulk via an online marketplace. Emphasize the unique advantages of your offerings and make that the main point of your sales pitches. This could include your use of a specific manufacturing process, your sourcing of materials from a local or distinctive source, or other distinguishing features. Be sure to share this information with retailers to demonstrate why your products are valuable investments.
2. Handling the Volume
The success of your wholesale business hinges on this factor. If you are unable to manage the high volume of wholesale, then it may not be feasible for your business presently. You should take into account not only the production process, but also the storage and distribution aspects. Are you only capable of producing small quantities? Is it possible for you to increase production when required? Do you have adequate storage space to accommodate the increased quantities until they are dispatched? How will you transport these large orders? If you are presently responsible for all the packaging, it may be worthwhile to contract someone else for this task. Preparing and shipping large orders can be challenging, and you must be ready for it. This might involve hiring someone to aid you in packaging and shipping orders or contracting with a fulfillment center. As you expand your wholesale business, warehousing is also a factor to think about. With an increase in retailers, you'll require more products and additional warehouse capacity. When it comes to managing a high volume of orders, you may want to think about dropshipping as an option. With dropshipping, you sell your products to a retailer who then sells them to their customers without keeping any inventory on hand. You would handle the shipping directly to the customer on behalf of the retailer. This is becoming a popular option for retailers as it enables them to avoid the cost of stocking and storing inventory. While you may offer a lower discount when using this model, it is worth considering if you believe you can handle the extra orders.
3. Pricing For Wholesale
Starting as a new wholesaler can be difficult due to the challenges that come with wholesale pricing. It is important to first assess if your pricing structure is logical. It is important to consider if you will be selling one product in large quantities or if a major order of several items would still count as wholesale, regardless of what products are being ordered. You will also need to identify your target businesses and determine the quantities they are likely to order. Once you have considered these aspects, you can start thinking about offering pricing alternatives for different types of businesses. For instance, you could consider introducing tiered pricing for businesses of varying sizes and order volumes. You should also think about introducing terms such as Net 30 and Net 60. Additionally, take into account whether your profit margins are sufficient to provide a reasonable discount to a customer who buys in bulk. Wholesale rates are usually 40-50% cheaper than retail prices. Are you able to offer retailers such low rates? Keep in mind that retailers also intend to earn profits from your goods; thus, a 10% discount will not suffice for them to purchase your products. On the flip side, it is equally important to avoid undercharging. If you do not set the right price for your wholesale orders, it may not be profitable for you. It is important to consider your operational and production costs, and determine the optimal pricing for your products to benefit both you and your retailers.
4. Know Your Audience
I have already addressed this point a number of times, but the type of merchants you focus on will have a significant impact on many aspects. Initially, you need to decide if you can manage a big retailer like a department store or if you prefer smaller boutique sellers. Additionally, you must factor in the amount of goods required and any specific regulations or prerequisites that the retailer has for their suppliers. Big retailers usually have regulations regarding the outcome in the event that your merchandise sells and who bears the burden if losses occur. This can lead to challenges and higher expenses when dealing with chain and department stores. Mien Studios' Lisa discusses this topic in her conversation with Handshake. For newcomers to the wholesale business, collaborating with smaller retailers may prove to be a wiser option. This way, one can gain experience without taking too much risk, as opposed to immediately working with a major vendor. Additionally, you should take into account the type of stores that would be most appropriate for your product. Will it be most successful in a store that offers a wide range of products or is it a specialized item that would be more suitable for a specialized store? It's crucial to think about this aspect when you approach retailers and when you establish your wholesale presentation to make certain that you are targeting the appropriate stores.
5. Product Images
In brief, suppliers frequently overlook the importance of product images. The pictures that may be appropriate for a B2C website may not be suitable for B2B purposes. It is advisable to use simple images with a white background, displaying the product in its natural form without any distractions. While flat lays or images with models may be permissible, using an image of the product alone is the most effective practice. In case you lack high-quality images, my suggestion is to either take them by yourself or hire a professional photographer. Although it may require a substantial amount of money, it will greatly impact your sales, whether in business-to-business or business-to-consumer dealings. As the saying goes, a picture speaks a thousand words, and a top-notch photo of your product can surely translate to numerous purchases.
6. Preparing For Sales
The next step to prepare for is sales, which can be a different experience when dealing with wholesale. You may have more direct interaction with buyers and need to follow-up more frequently compared to your B2C business. However, before tackling this, focus on how you will attract retailers to buy and where to locate them. Utilizing wholesale platforms such as Handshake can assist in this process. Handshake serves as a central location where retailers can browse through carefully selected wholesale collections from both emerging and reputable brands. It is not wise to rely solely on one option. You can sell your products through wholesale platforms and also directly approach retailers who might be interested in your products. You could advertise your wholesale services on your website and invite potential retailers to get in touch with you. There are various ways to find more wholesale distributors, such as listing your products with them. I am aware that some business owners are hesitant to directly sell their products or business to others. I understand that you don't want to seem too sales-focused, but sometimes it's necessary. Selling your products is an essential aspect of wholesale. You're not just persuading them to purchase one item, but to partner with your business and invest in it. This is a significant commitment, and you need to demonstrate that your products are worth their investment by being well-prepared. Once you have successfully made a sale, your work is not done. It is important to keep in touch with your clients to get their feedback on your products and inform them about any new products you may be offering. It is much easier to follow up with existing clients who have already purchased and enjoyed your products, as compared to finding new wholesale customers. Existing customers are likely to place bigger orders because they trust you and your products. Developing a good relationship with your retailers can be very beneficial.
7. Packaging and Promotional Materials
The final item on our list is often neglected by inexperienced wholesalers. When transitioning from an online to a physical retail business, it is crucial to contemplate how your products will be presented in brick and mortar stores. This could entail designing bespoke shelving units or providing branded signage and stickers. In addition, it may be helpful to create promotional content that the retailer can share on social media to encourage customers to purchase your products in-store. Earlier, we briefly mentioned the importance of reflecting on how you will prepare and package significant orders, which may require additional contents such as inserts, in-box advertisements, and ingredient lists. You must arrange these beforehand and make sure that your fulfillment team has access to them before they receive any orders. Retailers may inquire about the possibility of white labeling your product. Would you be open to providing a service that allows retailers to put their own branding and logo on your product? This could significantly increase your wholesale sales and is worth considering if you have the resources to do so. You should now have an understanding of the things you should anticipate when deciding to sell goods wholesale. This is a substantial choice, but it can also be highly satisfying. It's important to keep in mind that you can start small and gradually expand by adding more retailers. As you progress, you'll gain more experience. If you wish to acquire more knowledge, read our How to Sell Wholesale to Retailers article that provides additional helpful advice.
