By definition, selling wholesale means selling products in bulk and at lowered prices, typically for other business to retail to their own customers. It’s by no means a new business model, having originated as far back as the 1880s with the rise of large economies of scale. Today, many businesses still depend on wholesaling for both raw materials and finished goods, from items like food to manufacturing components.
The model benefits client businesses because they can purchase items at a much lower price point than what they’ll resell to their own customer base. To businesses doing the wholesaling, the approach helps them move large amounts of product while cutting down on handling costs and handling time. And given today’s markets, wholesaling is no longer limited to traditional business-to-business (B2B) transactions within certain industries. Wholesalers now have avenues to sell directly to customers without as many barriers, for example through online channels. In fact, customers may actively seek out wholesalers themselves if doing so serves their purposes.
There’s a lot of potential for you to make good money out of wholesaling products, especially from an online store. But doing so requires a good toolset for managing your products, plus a good sense of your market and your buyers’ behaviors. If you plan to wholesale any kind of product from a virtual store, pay attention to the following tips. These are what will help you achieve higher margins and a sales strategy that will work long-term for your online store.
Improve Your Supply Chain Management with an Enterprise Resource Planning (ERP) System
The cardinal rule for successfully wholesaling products is to have excellent supply chain management. This matters a lot whether you’re selling online or from a brick-and-mortar store. If your supply chain management system is efficient, then you’re better disposed to make the most responsive and profitable decisions for all your product. You will definitely want to invest in enterprise resource planning (ERP) software that helps you manage such a large scale of inventory. This is what will give you a bird’s eye view of which products are the most popular and which products move the fastest. It will also give you accurate information on which materials you should have on stock and when to schedule a restock.
With that in mind, consider using software like SAP Business One to improve your online store’s supply chain management. This is a software suite that many businesses around the world have adapted to their ecommerce operations, wholesaling included. SAP Business One is an all-in-one software solution with modules that can handle inventory, materials requirements planning (MRP), and other functions that relate to wholesaling.
See Which Products are the Most Viable to Wholesale
Though wholesaling is oftentimes a very profitable strategy, keep in mind that it doesn’t work for every kind of product. Making the wrong choice about which items to wholesale may leave your business in debt and saddle you with large amounts of unmovable product.
To keep your online store from going in the red, make very careful decisions about what items to wholesale. Choose products that you know actually sell and that aren’t hard for you acquire or manage given your limits. If this is your first foray into wholesaling, you may also want to enter markets with less risk. Doing this will cushion your business against potentially heavy losses.
Make Sure Your Pricing Strategies are Correct
Another important factor to consider is how exactly your products are priced for wholesale. The bulk price should take the following factors into consideration:
You will still want to price your goods for sale to other businesses so that you get a reasonable margin. To make the math easier on you, you can pre-determine a formula to give to your buyers. For example, for every 100 plain cotton T-shirts you sell to a client business that does shirt customization, the price per unit can be PHP 400. But if they buy as many as 500 plain shirts, you can decrease the cost per unit further to PHP 500. In cases like these, it’s good to have a ready answer for exactly how much you’ll charge in bulk.
Adjust Your Strategy to the Buyer
To truly make money from wholesaling, you will need to understand who will buy from you and in what conditions. Always think of the buyers who constitute your market and who will need the products on sale. Afterwards, you can adjust your marketing strategies accordingly.
Say you’ve opened an ecommerce store that sells dry baking goods like flour, cocoa powder, yeast, and sugar. A good example of a market you can wholesale these products to is the niche of budding bakers who want to start their own businesses. The option to buy in bulk from a one-stop shop will appeal to their need to acquire lots of material at a reasonable price.
Don’t forget that these buyers may also want to purchase certain goods in bulk for particular occasions. For example, the bakers mentioned above may want to buy a lot of packaging material come Christmastime. This is when you can sell items like Christmas-themed cake or cookie boxes at a bulk price.
Leverage Your Online Store Against Those of Your Competitors
Of course, the wholesaling approach alone isn’t enough to guarantee you a good profit. There are other ecommerce brands out there who share your market and who may also offer similar products at bulk prices. The challenge is for you to stand out from your competitors. But how do you do that without lowballing your products and earning at lower profit margins?
The answer lies not only in the products themselves, but the whole experience of buying wholesale. This includes your online store’s web infrastructure, your order fulfillment system, your strategies for packing and shipping, and your customer service. These, combined with fair bulk prices, are what will get your client businesses to trust you”and to always choose you over the competition. Once you take these factors into consideration, you’ll earn a loyal and consistent customer base that will continue to buy wholesale from you.
Final Words: Don’t Forget the End Users of the Product
In most cases, the primary market of a wholesaler consists of businesses that do reselling. This gives wholesalers the tendency to think only of those resellers, and not the end users. But as an online wholesaler, never forget the end users”they serve as the bigger picture for the entire wholesaling endeavor.
When you’re selling products at bulk price from your online store, think of end users as your end goal. If the resellers’ customers like what’s being sold to them, that’s what will get you repeat business as a supplier. It may be hard for you to figure out each magic formula for the products that you’ll sell wholesale. But if each formula considers the end user, you’ve got a good chance of succeeding”and moving large amounts of product off the shelves.