A wholesaler buys from manufacturer and resells to retailers. If you are thinking of starting a wholesale business in any industry, here are 8 Tips For Starting A Wholesale Business based on my experience of running whole business in different industries.
1. Good Negotiation skills:
a. To persuade manufacturer to get the products at low price, you would also need to negotiate with them for the margins even if the quantity of purchase in not high.
b. Need negotiations skills to deal with retailers, pass on less margin to them, yet be competitive and retain sales.
2. Create a strategy to get the best possible price and margins through negotiation, collaboration, managing credit and cash, bulk purchasing. You may even have to book some import orders.
3. You will need marketing ability to persuade the potential retailer to buy from you. This can be done by making cold calls, visiting potential customers and maintaining present customers.
4. You will need to understand the locational preferences of the customers i.e. where would they like to make a purchase? They would not prefer an isolated location to shop, when it is the retailer that comes an picks up the product; it would increase their transportation cost and would cause them operational difficulty. The same also holds true when you are sending the items, this is because potential retailers can find you out easily (greater visibility).
5. You would need to understand the logistics if you are providing delivery service. Your location has to such that your transportation cost plus has to be optimal. But you would also take into account the rental for the space that you take and other operational benefits.
6. The business needs committed time, day in and day out. Plan to spend at least 5 hours per week on market research to understand pricing trends and competition analysis. In wholesale, your pricing is important because you have a buyer who will check multiple places.
7. You will need to manage your sales force well, but yet have ways to connect directly with your customers. You would need to specialize in one niche area that becomes you USP; the cash and carry store keeps a lot of stuff but still has less variety and range as compared to a Wholesaler.
8. Need to understand the market, customers and may even need to increase your range of products if there is a demand from the customers.
Also, you should consider minimum stock (or no-stock) for slow moving items or non-moving items. You might even act as an affiliate for such items.
The whole business is tough but once setup properly can give good growth and can be sustainable provided you are constantly observing customer requirements and market pricing. You can compete and sustain if you can learn the business as fast as possible.