Business Growth, Wholesale, B2B Ecommerce

How to beat the 3 challenges every wholesaler faces

BY Vera Lim 4 Mar, "16

Over the past few weeks, we’ve been compiling a list of tips on how to take your business wholesale. However, in spite of your best efforts to find the right retailers, assemble a stellar sales team, and participate in trade shows, you’ll encounter challenges on your journey to wholesale success.

Now, for the final installment in this weekly series, we’ll be looking at some of these problems and how you can tackle them.


  1. Disintermediation

    workers-1210670_1920.jpgIf you’re a wholesale distributor, you are the bridge between the product manufacturer and the retailer. In order to turn a profit as a wholesale distributor, you need to sell your products at a markup. But since you’re occupying a middle position in the supply chain, you may start finding yourself at a disadvantage.

    With the benefits of technology such as wholesale marketplaces, your manufacturers can now transact directly with their customers, effectively cutting you of the equation. They can offer better prices, and your retailers will be happy to purchase directly from the manufacturer instead as they can enjoy bigger savings.

    To stay competitive in the face of disintermediation, you’ll have to offer your wholesale customers value-added services that will make staying with you worth it. This can include offering vendor managed inventory and drop shipping to help them out with their inventory management and fulfillment.

    Inventory management software lets you keep track of your retailers’ inventory levels so that you can deliver a new shipment once these hit their respective reorder points. On top of that, you can also add a shipping integration to your inventory management software to streamline your shipping and fulfillment processes.

  2. Tight margins

    Ideally, your wholesale price should be 50% off retail price.

    But according to Bill Green, managing partner at WSG Partners LLC, it's possible for the typical wholesale distributor to achieve only a 25% gross margin. As mentioned above, when retailers start purchasing directly from manufacturers, distributors have to keep their prices competitive AND offer value added services in order to keep their customers.

    In order to run a profitable wholesale distributorship on smaller profit margins, you’ll need to keep your business as lean as possible. You want to have only as much inventory as you can sell, to ensure that you won’t end up with dead stock.

    So when you’re figuring out how much inventory to stock, it’s always a good idea to know how much your customers are ordering every month. And here’s where business intelligence comes into play. 

    With business intelligence, you’ll know your wholesale customers’ purchase patterns over time and provide value-added services that can improve your relationship with them. 

    If your retailer usually places an order on the first Wednesday of every month, you can prepare stock for them in advance so they receive their products faster.

    In addition, if their order timing coincides with the launch of a new product, you can drop them a personalized message to say “Hello, we’re launching a new collection, and we’d love to offer you a preview to see if you’d like to add anything to your usual order.”

  3. New technologynew-technology.jpg

    In order to stay competitive in the wholesale industry, you need to adapt to new technology. However, in order to enjoy the benefits of these technological advancements, it can be expensive to acquire and learn these.

    The good news is that not every piece of new technology is as expensive to implement as radio frequency identification (RFID) tags. RFID tags allows sellers to track inventory accurately without needing employees to type it in, increasing efficiency and reducing data entry errors… but these can cost up to $50 each!

    When it comes to adapting to new technology, you can start with small steps that will make it easier for both you and your wholesale customer. For example, you could get a cloud-based inventory management software.

    With a cloud-based inventory management software, everyone who needs to access the data to do their job can log in to access the information they need -- like your sales representatives who are checking the existing inventory levels from their mobile devices before they write up a purchase order for a customer.

    Also, you can choose to set up a B2B eCommerce portal that allows you to make wholesale purchasing easy for them and for you. All they have to do is click on a unique store URL, and each of them will be directed to a customized eCommerce store that lists the prices you’ve specially set for them. And since this is synced with your inventory levels across all channels, you’ll enjoy real time updates of your stock movement.

 

We hope you’ve enjoyed this series on how to incorporate wholesale into your list of sales channels, and we’d love to hear all about your wholesale experience. So do drop us a message if there’s any topics you enjoyed and want to hear more about, and we wish you all the best in your wholesale endeavours!

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See Also:

eCommerce is the future of wholesale: 6 reasons why

Mastering wholesale: 9 can’t-miss articles about B2B eCommerce from TradeGecko

How to optimise inventory turnover: 9 tips

     

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