Wholesaling is a worthwhile and profitable business as long as you know what you’re doing. People who start a wholesale business without enough preparation often find themselves falling on their face.
To be a successful wholesale distributor, you need to know how to begin your business. In this blog, you will learn how to get started in wholesale, the foundations of how to be successful, and the other factors you need to consider before starting your business.
Build Your Sales Background
The first thing that you need to do is build your sales background. What this means is that if you’re not already educated in sales, you need to get started.
Many new business owners will start their new business with only a couple of sales courses under their belt, and that’s where you get into trouble. You’ll quickly realize that either you or your business partner need to have a business degree or the equivalent years of sales experience and this can make-or-break your business.
Wholesale distribution is a very popular industry because of the room for negotiation in deals, the ability to easily sell at scale and hold different product lines for different markets. The key here is that you want to buy your product at bulk at a low price, and make a profit by taking on increasing the price by an amount that still makes sense to your customer.
Ideally, you should have a background in sales due to the people skills that you’ll need, but you’ll also need to understand finance, business management, and logistics. How should your warehouse be set up? How are you going to get your products to your customers post-sale? What’s your business model and how many employees should you hire? What about HR policies?
Decide on What to Sell
Next, figure out what you will sell. The rule of thumb is that you can distribute anything you want as long as you understand your products. You should also figure out if your product is profitable. You can do this by researching and using tools like SEO gold coast to gauge demand by seeing what people are looking for online. From there, you can figure out the exact costs of your product, the shipping costs to your warehouse, how much it will be for you to get it to the customer, etc. You’ll want to keep in mind to factor in incidental expenses as well as also your own personal profits.
You must consider every cost and every factor before starting your own wholesale distribution business.
Other things to consider are if the market is willing to pay what you need it to pay, and when you’ll come out in the black after starting your business.
Setting Up Your Shop
Let’s talk shop setup.
Some start their business by running it in their basement. If you’re considering this option, you need to figure out storage. Consider what happens to your product’s price by running it from home because you have to facilitate the product transfers to and from your physical warehouse.
Another method is to build your wholesale business through an e-commerce platform which gives you more flexibility. This method allows you to rent more affordable warehouse spaces in areas where land isn’t too expensive and run your business remotely.
You wouldn’t want to run your business in a shopping center in the beginning because of the high brick-and-mortar costs.
No matter which method you choose, you should find one that makes it easy for you to get your products and access relatively quickly.
Understand Your Market
There are a few key things to be aware of when entering the Wholesale industry and one of the most important things to be aware of is the threat of consolidation. You’ll notice that some industries are heavily consolidated, such as pharmaceuticals. Mergers and acquisitions will often absorb smaller wholesalers and it’s why large companies control a lot of the market.
You may want to turn to specialty markets that the national companies don’t touch. In these specialty markets, existing distributors in the market may be becoming national businesses and when these businesses can’t find cost-effective solutions, smaller customers get left behind. These smaller customers should be your focus as a wholesaler and you’ll want to target them as your first customers.
You should also be adaptable. If you start to notice that something is wrong, step back and make changes that will put you back into a good place. Be ready to effectively change things quickly.
There’s also the decision of how you want to start curating your product lines. Some wholesalers start by buying from an existing manufacturer, others start from scratch and manufacture their own products, or begin with a business partnership. You may want to consider each method depending on your business model and funding.
The first option is beneficial because you can get products easily and sell quickly. This will allow you to gain clientele easily.
Manufacturing your own product and starting from scratch is probably the most costly, but it gives you the chance to become a product leader. The con is that it does take a lot of sales and marketing effort to grow and make a name for your business and product.
Business partnerships are something that you’ll need to thoroughly explore before committing to because time and money investment. However, the right opportunity will provide you with resources for quick training and extra support. This can really help launch your new business to success. You need to make sure you know what you’re getting into.
Finally, you will need open up a business bank account for revenue and costs associated with your business that isn’t connected to your personal account. You should also apply for a tax ID and get the right business licenses before getting started. You should also, if possible, arrange for any funding you will need in order to begin your business to last you three months.
These are just the basic steps on how to get started in Wholesale. Once you’ve started your business, you’ll also need to hire truck drivers, sales reps, and manage customer satisfaction. Make sure that your and your sales reps are using the right tools to succeed by using the best systems and processes for your business.
Author bio: Emily Bartels is a Content Writer and Developer at Constant Clicks that helps businesses to grow using digital marketing practices. She has been in this industry for 5+ years and specialises in writing educative content on SEO, Social Media, businesses. She loves to read trending news to keep her updated!