Wholesaling means buying goods in bulk directly from a manufacturer at a discounted rate and selling it to retailers for a higher price. The retailers then repackage the goods and sell them in smaller quantities to consumers for profit. So, the retailers ultimately determine the amount the products will sell for because they reflect the entire cost of doing the business.
Wholesalers are pivotal middlemen in a supply chain as manufacturers need to sell finished goods to generate capital for more production. Because retailers can’t purchase goods in large quantities due to insufficient capital, wholesalers help bridge the gap between manufacturers and retailers.
Wholesalers usually benefit from the marketing efforts of manufacturers and retailers. So, it helps eliminate their advertising costs. They only need to focus on maintaining their stocks until retailers collect them. Also, wholesalers’ profit margins are fixed for the products. So, they can estimate their profits and increase their earnings by growing their sales volumes.
Wholesaling could be a lucrative business venture. It’s an excellent starting point for people looking for new entrepreneurial opportunities. With proper guidance, you can succeed as a wholesaler. Here’s what you need to know.
Pick a Niche
It is essential to pick your niche wisely because it ultimately determines your business’s success. Start by identifying your areas of interest and making a list of them. You can select this by asking yourself the topics you are most interested in learning about and what you look forward to doing during your free time. For example, you might be interested in wholesale clothing or wholesale home goods.
Afterward, think about the problems people are facing in those areas and the solutions you can offer. One way to know this is by researching keyword combinations related to the niches using Google Ads keyword planner or Google Trends. Alternatively, you can have one-on-one discussions with your target market. You can also search forums (e.g., Quora) related to your niche to discover trending discussions. Research your competition to find out things you can add to your business to make you stand out.
In addition, find out the profitability of your desired niche. This will help you determine how much money you can make and narrow down your list. You should also test your idea. Many buyers are online nowadays. Creating a landing page for pre-sales of the products you’ll sell will help you know if it’s a viable niche to pursue. You can draw traffic to the page using paid ads and encourage conversations through feedback.
Choose your Employees Wisely
The right employees will help you build a thriving enterprise and increase your revenue. Attend trade shows and join organizations in your industry to build networks with professionals. That way, you can find high-performing employees from other companies looking at moving to different organizations. You can also ask other professionals in your field for referrals since they know what it takes to excel in the business.
Alternatively, explore the possibility of recruiting employees from other geographic areas by putting newspaper ads. You can focus on cities that had large wholesale plants close down or those with high unemployment. If you offer relocation costs, they may be open to moving to your city. You could also hire a recruiter to help you find the best candidates.
Automate your Orders
Taking down orders manually using paper forms is cumbersome and can lead to writing inefficiencies. Automating your orders will help streamline your business’s operations and enable you to provide more efficient customer service. Leveraging mobile technology by installing a wholesale ordering form on your online store will allow customers to order on their smartphones.
Also, automation will allow your sales representatives to access product catalogs and customer information efficiently. Various E-commerce platforms generate automatic pdf invoices and offer business analytics and product inventory. These features can help boost your business’s productivity.
Manage your Cash Flow
Cash flow is essential for wholesale distribution businesses. When you manage your cash flow efficiently, you’ll match client expectations, pay your expenses, and reinvest in purchasing more goods for your business growth. Common causes of cash flow problems in wholesale businesses are poor financial planning, declining sales, and bad debts. Others are overstocking, high overhead costs (e.g., rent and utility), seasonal sales fluctuations, and poor credit control.
To manage your cash flow, conduct a cash flow forecasting to estimate the cash flow of your business for 12 months. This forecast will reveal if your business can generate enough revenue to cover its expenses. Also, you can provide incentives like discounts to customers who pay for goods instantly to reduce the likelihood of late payment.
