The Essential Guide To Selling Wholesale To Retailers

The Essential Guide To Selling Wholesale To Retailers

If you are reading this article, you probably fall into one of these categories:

You have your products ready and are looking to start a wholesale business selling to retailers.

You have a business that is currently selling to consumers and is looking to expand to sell wholesale.

Whatever your reason for considering wholesale, this article will help you understand the wholesale landscape along with what is required to successfully sell wholesale.

What Is Selling Wholesale?

Benefits of Selling Wholesale

Tips to Get Your Business Started on Selling Wholesale

What Is Selling Wholesale

How does selling wholesale differ from selling to consumers? The fundamental difference is that you are dealing with a business rather than an individual.

Decisions are made based on the amount of revenue your product can generate for the business rather than an individual’s personal interest or need for a product. Wholesale buyers are not seeking to use the product for the experience, but instead are focused on selling your products to their customers.

Wholesale opportunities will vary depending on the type of industry you operate in and the kind of products you sell. The basic definition of “wholesale” refers to the sales opportunity for you to sell your products in bulk, usually at a discounted price, to a retailer. These retailers will then resell your products to their customers.

Benefits of Selling Wholesale

Selling to businesses means larger, more consistent sales, and increased brand awareness.

Selling Wholesale Means Selling In Bulk

In wholesale sales, since you are selling to businesses rather than individual consumers, a single order tends to be large. Instead of selling only a few items to end-customers like in B2C sales, you would sell your products in quantities many times that of B2C sales orders.

The average order values could be much higher.

Consistent Income Source

When selling direct to consumers, your sales figures can vary drastically due to constantly changing consumer preferences. Your business will always face uncertainty, not knowing when your B2C customers will move on to the next trend.

However, another beauty of selling wholesale is that businesses change their purchasing habits much less than consumers. If your wholesale buyers find out that your products are selling well in their store, they will continue to order from you.

Thus, your company will be able to receive income on a more consistent basis. Large retailers may even work with you to improve your product and increase your turnover.

Increase in Brand Awareness

Getting shelf space at retailers helps lift your brand’s awareness with consumers. The more stores your products are being sold at, the more exposure your brand receives. Also, when retailers carry your products, you have the opportunity to offer in-store discounts or other promotions to reach new customers and deliver your product messaging.

The increased exposure and awareness of being in a few retailers drive consumer demand, which then has the cyclical effect of influencing other retailers to want to carry your products.

Tips to Get Your Business Started on Selling Wholesale

How To Identify Which Retailers To Sell Your Product To

The first step to identify which retailers you should sell your product at is to conduct proper market research on your end-customer. Here are three key questions your research should seek to answer:

Who are your target customers?

What is their purchase journey like and what are their motivations?

Where do they research and purchase?

After your market research has been conducted, you can start identifying prospective wholesale customers to target.

If you are looking to target online retailers, you should also understand:

Who are their target customers?

How do they acquire customers?

How do they feature the products they sell online?

If you are looking to target wholesale customers who purchase for their brick and mortar stores, here are some guiding questions to help you:

Where do you envision your product to be located on the shelf?

Where are your competitor products located?

How much shelf space do you need?

Does your product align with the image that the store is portraying?

With these questions addressed, you will have a better idea of which wholesale customers you can start targeting.

How Do Retailers Purchase?

Another point to take into account is the frequency in which your wholesale customers purchase. For instance, is your product seasonal? Do your customers only need your products during specific times of the year?

A final point to take into account is your product’s shelf-life. If you are selling food products which have a short expiration date, you might have to handle smaller, more frequent orders. On the other hand, if your products have a long shelf life, your wholesale customers might not purchase from you on a regular basis.

What Is Your eCommerce Strategy?

These days, B2B buyers have many requirements when it comes to purchasing and they are increasingly venturing online. They seek independence during their purchasing process and expect an Amazon-like shopping experience.

A report by Microsoft states that 9 out of 10 customers worldwide expect businesses to provide customer self-service online portal for their products or services.  

How Should I Price My Products For Wholesale?

This is probably the most critical question in your mind: What price should you set for your wholesale products?

A common rule of thumb is to set your wholesale price around 2.5 times of your production costs. (Aka Retail Mark up) However, you should take that with a grain of salt. It’s extremely important that you do the math and ensure your material, labor, and overhead costs are covered. You should also plan to account for external factors, such as shipping and shrink costs, when setting your final wholesale product price.

One effective way to justify your wholesale price to your wholesale buyers will be to have a suggested retail customer price ( aka RRP)

How to Manage Different Customer Pricing and Discounts

One significant difference between B2C and B2B wholesale sales is the need to create different pricing lists for customers in wholesale.

In B2B wholesale sales, you deal with different types of customers. Your customers can range from small independents to large multi-nationals. The prices you offer to these customers should be different due to their different purchasing frequencies and volumes.

The easiest method to keep track of these different prices is by using pricing lists to keep track of prices and terms for each customer, or customer type. This helps to ensure you always provide your customers with the right pricing.

What Is Minimum Order Quantity And Why Is It Important?

A minimum order quantity is the minimum quantity or total value of goods a customer needs to order from you to start purchasing from you.

The main objective of selling wholesale is to incentivize your customers to order in bulk. To achieve the selling volume necessary to witness an increase in revenue, a minimum order rule is often enforced.

Published by Raffaele Felaco

I am an enthusiastic leader with strong background in direct and indirect sales with an exten- sive experience in both retail and wholesale business. I have been fortunate to have worked alongside teams in structured environments both in Italy and abroad over the last 20 years, en- abling me to develop strong leadership skills, a natural approach in effective communication, the ability of positively influencing others and master complex business negotiations.

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