In an earlier article, we wrote about expanding your business from retail to wholesale. We’ve heard some businesses are looking to expand in the other direction -- from wholesale to retail, and we’ve listened! Wholesale offers a larger increase in revenue, and the opportunity to increase your brand presence, while retail can help you establish your personal brand. So it’s time to seize the opportunity to get the best of both worlds!
Branching out from wholesale to include retail can sound complicated. We’ve researched and pulled together some key areas for your consideration before you embark on expansion.
1.How much of an investment are you ready to make?
How much are you looking to delve into the retail game? This will determine your level of investment. Your choices range from lower-investment options like an eCommerce store or pop-up stores, or going all out with signing a lease for a brick-and-mortar location while operating an eCommerce store.
Moreover, starting a retail business involves more than just putting your products for sale in a store and expecting customers to walk in and make purchases. For a physical store, there are issues like selecting the best location, staff, and overhead costs to consider. For an online store, you have to embark on an aggressive marketing strategy to break through the noise on the internet, while ensuring your customers’ details are safe when they make purchases.
2.How do you avoid a conflict of interest with your stockists?
Opening a retail store doesn’t mean that you, as a wholesaler, will give up the wholesale side of your business. After all, wholesale is still a great source of revenue and offers a great marketing opportunity.
However, the flip side of this means that your stockists will start to see you as competition, and as you’re likely to intend to continue with your wholesale channel, this can affect your brand and revenue. So how does one resolve this conflict of interest? The key lies in seeing your stockists as teammates instead of competitors, so underselling them is definitely a no go.
The straightforward option is to have exclusive products for the different retail channels so that there is minimal overlapping. However, before doing so, do consider the wider range of products you will have to stock in smaller quantities for different channels (and the accompanying costs).
A second option is to offer eCommerce customers the choice between delivery and pick up from the nearest retail store run by your stockists. By doing so, you ensure that the stockist feels like your increased presence can help their business, since they don’t have to actually do anything to make that sale. Meanwhile, you gain by having the stockist store your inventory (which they’ve already purchased).
3.How will you attract retail customers?
As a wholesaler, your focus is not on building beautiful web pages or showrooms (if you have these, kudos to you) since stockists are only interested in your product.
However, that’s exactly what the public is looking for before they decide whether or not to purchase from a certain outlet. Visual merchandizing (what goes where, how to set up a physical store layout to maximize the customer’s experience) plays a large role in brick-and-mortar retail. With regards to an online store, you need to start thinking of how to cut through the clutter of the internet -- that means learning how to use SEO and social media. The good news is that many eCommerce platforms come with visually pleasing (or standardized) store designs, along with the necessary security encryption to protect your customers’ information.
4.How will you build a strong online presence?
When opening an online store, gone are the days of costly custom built sites. With shopping cart solutions like Shopify, WooCommerce, and Bigcommerce, along with marketplaces like Amazon and eBay, eCommerce has never been easier. In fact, given the low costs of opening one of these online stores, even opening two to reach out to a wider customer base wouldn’t be too difficult.
The amount of shopping done on mobile devices is increasing, so make sure your online store is optimized for mobile, allowing your customers to shop on the go!
The major issue faced when selling through multiple channels (in this case, wholesale, shopping cart solution, and marketplace) is the difficulty of consolidating your inventory records. Instead of setting aside stock for your different channels, with the right inventory management software, you’ll be able to update your products, have your online shops reflect the latest status for your items, and most importantly, once you sell an item on one channel, stock levels across all other channels will be updated immediately.
5. How will you make shipping for small orders efficient?
As a wholesaler, you’re probably used to dealing with sizable order quantities from your stockists. However, with eCommerce, you’re likely to get a high volume of small orders from the public -- the very opposite of what you’re used to.
If you offer drop shipping, in which the supplier is the one who ships out orders as opposed to the retailer, expanding into eCommerce is a natural progression of what you are already doing.
The alternative to drop shipping is to find a software, such as ShipStation, that can help automate the shipping process. With one of these shipping softwares, you can print labels in bulk, and it will automatically retrieve orders from different channels, keep you updated on order status, in addition to sending customized email confirmation and tracking information to your customers.
Answering these questions can be the first step in deciding where you want to take your business. Depending on the answers you come up with you may end up deciding that wholesale is a route you are more familiar and comfortable with, or that it’s time to jump on the retail/e-tail train… Or better yet, do both!