WHOLESALE MANAGEMENT   |   5 minute read

McIver's guide to maximizing profit in a wholesale business

At TradeGecko, we believe that wholesale is another and perhaps, more lucrative channel to add to your multichannel sales approach. Together with Heather Smith and Nicole McIver, we’ve put together some tips for you to consider as you plan to add wholesale to your mix.

Nicole McIver is Australia’s pre-eminent wholesale specialist. Through the experience gained from founding Wholesale Baby and Stock My Store, she has an in-depth understanding of how wholesale businesses operate. Now she offers her consulting expertise on a range of topics that intersect with wholesaling: sales, marketing, cataloguing, social media and, of course, pricing.

Growing your wholesale businesses from retail

Generally, good places for a retail store to find a wholesale brand in Australia are trade shows like www.lifeinstyle.com.au and www.reedexhibitions.com.au, and online directories like www.stockmystore.com.au, or simply searching online for the type of product with the keyword ‘wholesale’. If you’re in the USA consider websites like www.wholesalecentral.com.

McIver says, "Unfortunately, what quite a few retailers do is see what their competition is stocking and then contact those brands. Obviously, if you have a gift store in Perth and you are holidaying in Brisbane and go to an awesome gift store and see a cool product, then going home and looking them up and stocking them is perfectly okay. It’s more of a problem when the ones down the road just copy each other."

McIver specialises in helping brands and wholesalers contact stores about stocking their product. She believes that both wholesale brands and retail shops should constantly be looking for opportunities. She says, "Wholesale brands should be contacting stores, either themselves or through their sales staff. Stores should also be looking for new exciting products to stock and also looking for items their customers are requesting."

Growing your wholesales businesses from retail

Take your wholesale business online

McIver recognises that a trend has emerged towards online wholesale ordering. She believes that it’s vital that wholesale brands have a website that lists all their stockists and also has a wholesale ordering facility. TradeGecko’s B2B eCommerce platform provides you the opportunity to do just that - open your own B2B eCommerce store and invite your customers to directly place orders online from anywhere at anytime.

An increasing number of retailers are branching into wholesaling/distributing other brands, benefitting from a greater gross profit margin than when they do sell at RRP (recommended retail price). They benefit from connecting with and selling to other retailers. These types of retailers can also be worthwhile contacts for new wholesalers.

When wholesalers are forging relationships with distributors, ensuring the distributors have a desire to sell your products is key. This may seem obvious, but McIver has seen some brands sign agreements with distributors, who then make no effort to sell products to other retailers, and thus their distribution is inhibited. The distributor may only be interested in selling directly to the public themselves, massively impacting the opportunities for the product.

McIver says, "If you create your own brand and sell it in-store alongside other products and have no desire to wholesale your brand, that’s fine as it’s your brand and you can do what you like with it. And if you are onto something that sells well and you are making a great profit, then why not! But if a retailer is interested in becoming a distributor, even for just a couple of brands, I’d be more than happy to show you a few brands that could work well for you and for Australian retailers."

Take your wholesale business online

Defining pricing in a wholesale business

McIver says, "Too often I work with brands that have started off selling to public but then, when they move to wholesaling, realise they haven’t priced their RRP high enough to allow for a decent wholesale price." If a wholesaler also sells their products directly to the public, they need to ensure they are selling at the RRP and supporting their stockists where possible. This means if a brand starts off selling to the public with future plans to sell to retailers as well, it’s best to set a RRP based on what the wholesale price will be, not the other way round.

Generally for the types of brands McIver works with, the RRP is double the wholesale price. She says, "Each brand is different; some double the exc-GST price, some double the inc-GST price, some round it up, some round it down. For example, for a $10 wholesale exc-GST product, I’ve seen brand that RRP for anywhere from $19.95 to $22.95." If you’ve already been selling that same product to the public for $14.95, you can’t then hope to sell it for $10 wholesale.

Maximising profits in a wholesale business

Wholesalers can reduce their expenses and improve their profits in a number of ways, according to McIver. This includes moving from air to sea freight, implementing systems that replace labour costs and buying in larger volumes from their manufacturers. They should also be mindful of fluctuations in their base currency.

Maximising profits in a wholesale business

Managing currency is an ongoing issue for businesses that import goods they onsell, with unforeseen movements in currency potentially resulting in a drop in profit margins. McIver’s clients are mainly Australian-based businesses. She says, "Brands need to put up their wholesale price and RRP to allow for a low Aussie dollar, as too many are not making enough money now and hoping it’s going to change soon, but hoping isn’t going to give you the profit your brand needs to survive another 12 months."

If you are a wholesale business who could benefit from Nicole McIver’s advice, feel free to contact her at www.nicolemciver.com.au.

About the author

Heather Smith is an accountant specializing in content creation. She hosts the Cloud-Stories podcast, authored Xero for Dummies, and develops blog content and training videos for business within the Xero community.

See also:

You're either online or you don't exist - 5 ways to stay on top of the B2B eCommerce rat race
A new B2B eCommerce platform: empowering you to sell more
Going wholesale from retail: 8 ways to help you decide if your business is ready