Wholesale can be a wonderful stream of income for most businesses, but what exactly is wholesale and how does it work? In a nutshell, wholesale is when you partner with a retail store to carry your product(s). You sell your product to that retailer at a lower price point than your current retail price point. It is that retailer’s responsibility to then price and sell the merchandise they have purchased from you.
Who Does Wholesale benefit?
Both you, the vendor, and the retailer benefit from wholesale. As a vendor, you will benefit in many ways. One major way you benefit is the potential to get your product(s) in front of a much larger audience. When working with a retailer (either on or offline) you automatically gain access to their audience. Another wonderful benefit is the increased income. With each wholesale order (even at a lower price point) you are still generating a profit, and as we know, every penny counts. As for your retailer, they benefit by increasing their product line and drawing in more consumers. Just as you benefit from their audience they, in turn, benefit from your audience. It is a mutually beneficial relationship.
Pricing Is Key
Understanding how to price your products is also key to growing your business with wholesale. As I mentioned earlier, your profit margins are smaller with wholesale. Your goal should be to move more units of your product, and that can be done both by securing multiple wholesale accounts and accurately pricing your products. A good starting point with pricings is as follows, Retail Price divided by two = your wholesale price.
Order fulfillment is something to consider. It is everyone’s hope with wholesale that the retailer moves quickly through your product, however, how quickly (and realistically) can you fulfill a retailer’s order? Consider where your deliveries are. If you work in one part of town and you have all over town traffic, weather and fuel prices will now impact your ability to operate and make timely deliveries. If you are delivering to a heavy traffic area like downtown, you need to consider how you will pay for parking and how close you can get to the store to drop off your delivery. Parking or the lack thereof may also impact your delivery schedule.
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Cold Marketing and Sales
With wholesale, it is best to research your target retailer before contacting them. Many retailers prefer being emailed before you calling or just walking into their business and asking for a meeting. Remember, these retailers are business owners, and they need to put their customers first. Taking time away from a customer and a potential sale won’t leave a good impression on that retailer. Most retailers include contact information on their websites and some even have “new vendor” applications.
Wholesale Is About Relationships
You need to be able to follow up with your retailers regularly and build a relationship with your retailer. Do not just assume that they will reach out to you when they need more product. Small accounts have fewer employees and are stretched thin they will not always make time to follow up with you. They will simply fill your empty spot with another product. Relationships are key, and it is up to you to build them.
An unorthodox avenue into wholesaling would be via county fairs, farmers’ market, and expos. Click on the links to read more on each of those avenues. For more in-depth one-on-one help with wholesale click here.
Want to learn more about wholesale? I am hosting a no-nonsense action packed webinar on Thursday, March 16th @ 11 AM PST/ 1 PM EST. Sign up here, I can’t wait to see you there.
Cheers to Your Success!
Do you plan to grow your business with wholesale? Please remember that I am sharing what I have learned in over a decade of helping small businesses grow and succeed. The opinions expressed in this blog are solely that of The Business Ref and should be considered as such. None of the opinions expressed within this blog should be taken as personalized advice. Always consult with your legal counsel prior to making any decisions regarding your business. Remember, sharing is caring. If you have found this blog helpful, please share it with someone.