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What is Wholesale Business and How to Start One?

10 min read

Wholesale. A concept that can be strikingly different from the regular retail trade. Wholesale refers to selling goods in large quantities at a low price. A wholesaler is, therefore, an individual or company that facilitates the sales of products in large or bulk quantities. A wholesaler sells to different retailers and outlets. Retailers will then be able to sell the products to consumers in their brick-and-mortar or ecommerce stores.

The wholesale business comprises the sale of products in bulk, and at a lower price. Ultimately, this reduces the costs and the handling time involved.

There are several types of wholesale businesses. A wholesale business can be in the form of merchant wholesale, brokers, or sales and distribution. Wherever you belong, you can be a go-to wholesaler by gaining a foothold in the industry through your offerings. Ecwid’s eCommerce solutions will help make this achievable- both for competitive advantage and guaranteed profit. We provide a solid and reliable eCommerce platform for an incredible customer experience.

Keep reading to learn more about what wholesale business is, the benefits, and how you can make the best of the domain.

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Wholesale Versus Retail Business

Wholesale trade or business focuses on the sales of goods to institutions, businesses, and governments. This is contrary to the case in a retail business, where shoppers and individuals are involved in the sales of products.

There are two possible models regarding wholesale business. First, a business may decide to buy goods in bulk from manufacturers, store them, and later resell them. In the second model, wholesale business can be a situation where you- as a business owner- produce your products and goods, and sell to retailers, who later sell to the end-user. The second model has been prominently adopted by many wholesale marketplaces.

According to Investopedia, wholesale business reflects the consumer state of the economy where there is significant reliance on wholesalers to deliver products or goods to retailers in large quantities.

Distribution of Goods in Wholesale Business

You might be asking yourself: how are goods distributed in wholesale business? If you are a wholesaler or an intending one, then wholesale distribution is pretty easy. Wholesalers buy goods from a company or distributor and sell them to a retailer and down to the end-user. Suppliers of wholesale goods are responsible for sourcing trending products to meet the supply of recent, up-to-date goods and products to retail individuals.

Upon identifying a trend, wholesalers will research getting the products with the most cost-efficiency, choosing from a deluge of options of producers and distributors, and finally, supplying the products to retail individuals or businesses.

Why Wholesale Business?

There are several benefits associated with wholesale business. And these should suffice to convince you to consider delving into it.

Opportunity to save money

Buying products in large quantities will allow you to save money via discounts given by the manufacturers on large orders. This implies that you can get products at lesser prices and sell them at higher prices. You will also be a step ahead with a significant competitive advantage which is possible through the large volume of buying and selling. That would, however, depend on your initial capital.

Ability to build a tremendous network of suppliers

Wholesalers need a viable, active, and reliable network of manufacturers and suppliers. The reason being that you cannot afford to slack in terms of ensuring timely delivery, offering quality products, and honoring relationships. Invariably, these seemingly inconsequential things will sum up to ensure that your business runs smoothly. Thus, supplier relationships must be positive, and cannot be taken for granted. It should also be sustainable.

You can become an expert

By researching, selling products, and doing it over and over again, you stand the chance of becoming an expert in that niche. Irrespective of whatever products you are selling, wholesale business accords you the privilege of gaining a vast knowledge of your industry and its operations. Leverage this knowledge to draw more people to your wholesale business online store and divulge information that will motivate customers to buy.

Ease of expansion

By the time you have stamped your feet in the sands of time in your industry, you will automatically begin to connect with other markets. In some cases, these connections could come in the form of upselling opportunities. In others, they could be cross-selling. The idea is that they can bolster your business to ensure greater success. Meanwhile, this expansion will be effortlessly achievable provided you have a working relationship with the companies providing the products and goods for wholesale.

Starting Your Wholesale Business

A wholesale business is an excellent option if you do not want to go through the grueling stress of dealing with retail sales. The following are tips to follow that guarantee real success:

Identify the market

Be sure to do due diligence and do proper research to identify the ideal market that suits your products. Take the effort to find dealers, customers, and store owners who will buy the products from you.

While you build your brand, you also need to determine the competition. This aspect is essential because the wholesale business can be fiercely competitive. Ensure you know products, their prices, and the quality of service provided by these businesses.

Identify a proper office location

You will also need to identify an appropriate location for your business. Space can be scarce and costly in cities. And you may need to separate your office from your warehouse. Also importantly, get someone who can manage your inventory very well.

Identify the suppliers

Another essential aspect of wholesale business is to get in touch with your manufacturers that will be willing to have you as their wholesaler. Many companies want you to meet a target, so you have to think it through before deciding on any.

You can contact the manufacturer’s distributors directly if they are not willing to sell to you. In that case, there will be a way to calculate the profit.

Read more about working with suppliers:

Set up a website

You have to set up your website if you want to be a successful wholesaler. However, this has become incredibly easy with the introduction of ecommerce solutions and IT-related tools. You can also set it up with WordPress. Hence, it will create an avenue to inform distributors and companies that you are ready to do business.

Also, they will be able to contact you without any hassles. And your website will consequently attract retailers that are interested in dealing with your products.

Also,

  • Determine and confirm manufacturer’s return policies, as well as the way they intend to handle goods returned to them as a result of defects or whatever reason. Ensure this before proceeding and concluding on your choice of manufacturer. The reason for this is because you’d better steer clear of any manufacturer that is not responsive. Otherwise, you might end up with too much inventory that you cannot sell.
  • Get a simple and easy-to-use inventory software that helps control and keep track of your products in different warehouses. Also, this will enable you to have a proper delivery schedule to customers and, as a consequence, help you to earn better.

Conclusion

If you find yourself producing your goods and products in bulk, and later selling them to retail shoppers (who then sell your goods to the individual actual consumers), you, my friend, are in the wholesale business. And it’s a very lucrative business if you know how to use it to your advantage. To maximize profit, you will need to master the marketplace, how it operates, and how you can thrive within it. This is where the idea of ecommerce comes into play. And for all your ecommerce needs, especially on a wholesale level, we believe Ecwid is an ideal platform for guaranteed success. Happy selling!

Do you want to learn more about selling wholesale?

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About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.

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