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B2B (Business-to-business) businesses include distributors that represent manufacturers and wholesalers who benefit from greater purchasing power by buying in bulk.
These B2B companies sell their products to retailers who are classified as business-to-consumer (B2C). While larger retailers will buy from the distributor directly, smaller retailers will turn to wholesalers for their purchases.
Even though B2B prices tend to be significantly lower than retail prices, the real benefit of running a B2B wholesale or distribution business relies on moving large volumes of products.
If you’re considering getting into the B2B industry as a wholesaler or distributor, here are three necessary steps to get you started:
If you have an existing business, your current customers and experience could help you clinch the distribution rights to a related product. For example, if you run a bar and you’ve found an amazing distillery in Australia that produces great whisky, your experience in the industry could offer the distillery the reassurance that you’d be an invaluable asset in helping them to take their brand overseas.
However, if you’re looking to start from scratch, you can explore all products you’re interested in that offer distributor and/or wholesale options. The next step is to review the requirements for selling your shortlisted products. Once you find a product that’s a good fit for wholesale / distribution, you can start to make your new wholesale business a reality!
In addition to the money you’ve spent to acquire your goods, you’ll need to manage your expenses incurred to keep your inventory safe and organized in your storage facility. These include fixed costs like the rent or mortgage costs of the warehouse and variable costs like manpower and utilities needed for daily operations.
To keep your costs down, you can start by ensuring your storage space maximizes efficiency. For a start, consider narrowing the aisles to avoid wasting space. In addition, you can lower your manpower costs by developing pick lists that identify the locations of every item to save time when fulfilling orders.
If you take your business online, you’ll be able to leverage software that can generate intelligent picking routes, providing your pickers with the most efficient and shortest routes.
It’s unlikely you would have a monopoly on distribution and wholesale unless you’re the manufacturer. And even if you’re the exclusive distributor for a specific product, there might still be competition with similar product types.
When dealing with competition, the key is differentiation. As you’re new to wholesaling and are still establishing your brand, you have an opportunity to build a reputation on being the best at what you do. For example, offer better support, faster delivery, and possibly also price-break discounts that kick in once customers purchase a certain quantity of products.
You can also differentiate your business by making it easy for retailers to place orders with you. Instead of sending bulky print catalogs and order forms, create an eCommerce store to streamline the order process for your retailers and improve the efficiency of your operations.