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The first step in a wholesaler’s journey to selling their products is figuring out how they can get the best price for them. This guide will help you sell wholesale to retailers and make more money on every sale.
Some companies specialize in wholesale distribution, while others help established merchants grow by selling their products wholesale to other firms. Here, we’ll walk you through a series of seven stages to get your wholesale company off to a good start.
1. Create a pricing strategy
Pricing strategy definition may make or ruin your firm. If you overprice your things, they will not sell. However, if you underprice, your company will lose money and may not be able to remain afloat.
Fortunately, when it comes to wholesaling, there is rather set-in-stone price regulation. In general, sellers should get a 50% reduction off the selling price. If the MSRP is $50, for example, the wholesale price will be $25.
Tip: If your product doesn’t have a predetermined MSRP price, you’ll have to do market research to evaluate its worth.
In order to remain successful and competitive, wholesalers often establish a profit margin of at least 50%. Your profit margin is the amount of money left over after all related expenditures have been deducted. So, if an item’s unit cost is $15, you’d set the wholesale price at or above $30 to get a 50% profit margin. Customers would then be charged $60 for the item.
2. Create a secure storefront with a password
After you’ve decided on your pricing approach, create a password-protected storefront where merchants can see your items and make orders. Unlike a conventional online storefront that is open to all customers, a password-protected shop ensures that only real business owners browse your discounted items and protects your company from fraudulent orders.
With Shopify’s MagicPass, you can quickly create a password-protected store, or if you have a bigger business, you can utilize Faire, a wholesale marketplace where you can submit photographs and your product pages will be created for you; payments are linked into the platform.
Tip: If you already have a Shopify website, you can use Shopify Plus to effortlessly convert or extend your current online store to password-protected mode.
3. Obtaining Products
To get your items, you will interact directly with producers as a wholesaler. This might imply that you are purchasing things that manufacturers currently make or that you are collaborating with a manufacturer to develop a bespoke product that you have designed.
If you wish to create your own product, such as a leash with a bungee attachment for jogging with your dog, you should contact a manufacturer with your design ideas. The manufacturer will then give you a prototype, which you may modify and return. This procedure will continue until you find the product you’re looking for, at which time you’ll purchase it in quantity to sell to stores.
Creating a new product is a popular method for independent companies or novel ideas since it guarantees that your product will be one-of-a-kind and tailored to your precise requirements. Creating your own product also makes it easy to apply your distinctive branding to a product, both legally and logistically.
However, it should be emphasized that developing and fine-tuning a new product might take months, and there are frequent expenses involved with each phase. Make sure you’re prepared to put in the time and money required to create your own product.
You may partner with a manufacturer to purchase and sell a product that they already make for a speedier turnaround. This is a popular tactic among Amazon sellers and those operating on public marketplaces. In this scenario, you find a high-demand product or location and then seek already-available items to meet that need.
There are a few variables to consider when sourcing your items, and they aren’t simply unit costs. Always be on the lookout for more efficient and cost-effective providers, and these benchmarks will assist you in determining your best options:
- Shipping: Discuss shipping timeframes and prices with your manufacturer. You may also examine if there are any deals for free delivery or if there are any minimum purchase conditions.
- Ask your manufacturer how long it will take to receive your original purchase, as well as any subsequent refill orders. This will assist you in developing an efficient inventory management system and ensuring that your items remain in stock.
- Know how long it takes your supplier to create your products and be on the lookout for faster methods to receive them.
4. Establish Your Policies
Wholesalers, unlike traditional retailers, do not allow customers to purchase their items in single or random numbers. In addition, unlike retail, wholesalers are often compensated well after the purchase of the original goods is made. As a result, wholesalers must establish purchasing, payment, and timeframe standards that both they and the firms that purchase their products must adhere to.
Minimum order quantities should be set.
The fact that you sell at scale is one of the main reasons why wholesaling is such a profitable business strategy. Setting minimum order numbers forces shops to buy a particular quantity of your items in order to be eligible for purchase. When wholesalers purchase in quantity, this assures that they can earn a profit and turn over their merchandise. Minimum order amounts might also discourage people from buying wholesale.
In general, if your product is more costly and needs a lot of effort, your order minimums should be larger. Also, if you have a low-cost, simple-to-make product, you should decrease your order minimum.
Tip: Wholesalers often provide a special sample or test goods so that shops may inspect the items in person before placing a major wholesale purchase. It is normal to offer these samples at cost if the product is bespoke or labor-intensive. It’s typical to give out samples for free and charge shops for delivery if the product isn’t specialized or labor-intensive.
To encourage greater orders while retaining profits, some wholesalers would scale their rates with order amounts. You might, for instance, sell 100 umbrellas for $8 a piece or 500 for $6 each.
A minimum order price is another regulation that you may come upon. Quantity restrictions may or may not apply in this scenario. For example, a store may purchase one of many different things to fulfill the dollar minimum, but they would still have to meet the minimum quantity and order price criteria.
Minimum Order Price: When a store must spend a specific amount of money in order to be qualified to make a transaction.
Make a payment schedule.
Set payment conditions for your retail customers to follow to protect yourself from losses.
- Retailers are told how long they have to pay you for your products if you provide extended or net terms. The timeline might be determined by when shops get your items or when you send them out. The number of days until payment is due is stated as “Net” + the number of days until payment is due. The most typical extended terms are Net 30, Net 60, and Net 90, for example.
- Customers get a discount if they pay for your items within a particular length of time before the extended terms expire. This policy is written as X/A Net D, with X denoting the amount of the discount, A denoting the number of days required to qualify, and Net D denoting your extended terms. So, 2/10 Net 60 says you’ll provide a 2% discount if the store pays for the products within 10 days of the 60-day extended terms expiring.
- Proforma: This is a payment method in which you dispatch your stuff as soon as you get money.
- Customers who pay an advanced deposit must pay a part of their order when it is placed and the remainder when it is due.
- SOR (Sale or Return): This policy states that sellers must only pay for what they sell and may return any unsold products.
Calculate Your Shipping Prices
You’ll need to figure out who will cover the expense of shipping. If it’s the client, you may want to give them the option of selecting the vendor. If your items are delicate or you operate on a big scale, you may wish to limit their alternatives or even mandate them to use a certain shipper.
If you’re covering the shipping costs yourself and giving reduced or free delivery, you’ll want to choose a shipping business that’s both dependable and cost-effective. You should also confirm that they can give a pickup schedule that is compatible with your manufacturing schedule and quantity.
You’ll be sending bigger volumes as a wholesaler than you would as a regular retailer.
Make Your Payment Collection Conditions
If you decide to let merchants pay for things after they place an order, you’ll have to figure out how you’ll collect those funds. This may be accomplished through an invoicing system in which you give customers a tab that they must pay by the due date.
You may also utilize a delayed payment tool like Afterpay, which would issue invoices and automatically charge purchasers on the agreed-upon payment dates.
5. Take Pictures of Your Products
The next step in the process is to photograph your merchandise for your website. You’ll need a good camera for this, as well as a clean background for your items to stand out against, and shots of all the crucial product angles. The most important things you want from your images are that they provide retailers with all of the information they need about your items and that they showcase your products in the greatest possible light.
6. Make a line sheet or an inventory list
A line sheet is a catalog that purchasers will use to place orders for your items; it contains all of your product photographs and descriptions, wholesale pricing, IDs or names, and any other pertinent information. Keep your layout basic and tidy for easy reading. Line sheets are designed to provide consumers with an overview of what you have to offer.
While putting things in order can aid readability, you should also incorporate some branding on your line sheet. This can aid merchants in determining if your items are a suitable match for their company, as well as provide you with an opportunity to introduce your brand to buyers.
To create a line sheet, gather all of the product images you took in the previous step, decide what information you want your line sheet to display, and then create a catalog either manually in Photoshop, with the help of a graphic designer, or with the help of a platform like NuOrder, which will create and update your line sheet for you.
Examine the samples below to discover what a clean, well-branded, and informative line sheet should resemble:
The information on this line sheet is presented in a straightforward and easy-to-read style.
This line sheet retains the brand’s identity without sacrificing readability. (Image courtesy of creative Hive)
7. Locate Your Clients
After you’ve finished your line sheet, it’s time to get down to business: selling. You’ll likely use various techniques to promote your brand in front of customers depending on your product market and the client base you wish to target.
The first question you should ask yourself is who you believe your items would appeal to as merchants or consumers. If I were selling wholesale candles, I would go to home goods stores, boutiques, and gift shops, for example. You’ll need to figure out how to get your items in front of your target market after you’ve identified them.
Don’t forget to expand your horizons outside your present industry. Consider what sectors of retail you can grow your items into if you’re expanding an established business. If you’re selling jewelry, consider gift shops, museums, and boutiques in addition to jewelers.
We’ll look at four different ways to get your items in front of merchants so that you may make sales.
Make Use of Your Website
Use Google advertising and effective search engine optimization (SEO) tactics to drive visitors to your website. Smart advertising algorithms will put your website in front of your target market, and strong SEO will make it simple for consumers to locate it online. You may also engage marketing experts to assist you in setting up your website for success.
If you’re a well-known brand, you may also leverage your current website as a source of wholesale traffic. Simply add a link to your current website for wholesale queries, and let your regular visitors bring in wholesale customers.
Unless you’re a major brand, I wouldn’t rely only on your current website presence to drive attention to your wholesale channel. Because the clients that visit your current website are normal shoppers rather than wholesale purchasers, you’ll need to promote your wholesale website separately to attract enough of the correct individuals.
Complementary
Picking up the phone, sending out some emails, or going out on the town to sell your items to related companies is another method for contacting clients and getting sales.
Keep your written pitches around ten phrases long, explain to customers why you’d be a good match, and provide some information about your items. Continue to pursue a green light until you draw someone’s attention, and don’t leave until you receive a “no.”
Alternatively, you may get business cards and go out and meet with local company owners. In-person encounters are extremely beneficial if you can bring product samples or if your product needs a demonstration, and they are arguably the most effective approach to guarantee that your pitch is heard. You may also attempt phoning companies over the phone to inform them about your items if you don’t have direct access to businesses that will sell your goods.
When it comes to pitching your goods, it’s all about the statistics at the end of the day. The greater the number of individuals you can reach, the more likely you are to make a sale. Keep trying and contact as many companies as you can.
Participate at Trade Shows
Attending trade exhibitions is one of the more classic wholesale marketing tactics. Trade exhibitions are purchasing events for retailers when a group of wholesale companies get together to show off their wares and make substantial purchases, usually for a season or quarter. For example, in my boutique, we went to two trade exhibitions a year to look at all of the newest goods from wholesalers and conduct the majority of our winter and summer shopping.
Find a show that fits your brand with a wholesale directory. When choosing the event that is perfect for you, seek for comparable or complementary businesses to ensure that you are attending a show that caters to your target demographic. After that, you’ll need to get a tent or some other kind of structure to make a makeshift showroom.
To make your “storefront” attractive and entice visitors in, use visual merchandising tactics, signage, and effective marketing initiatives. Remember that you’ll be competing with a lot of other businesses, so make sure you do all you can to make yours stand out.
Retailers can discover a variety of wholesalers at trade exhibitions since they bring them all together under one roof. (Photo courtesy of REPatron)
Participate in a Marketplace
Wholesale marketplaces, as previously said, are a terrific way to get your items discovered and simplify your business. Wholesale marketplaces are used by retailers because they enable buyers to browse many stores in one location, providing a virtual trade show experience.
There are many different markets to select from, and much like tradeshows, you need to make sure you choose one that will appeal to your target audience. When picking a marketplace, look for comparable brands or complimentary items to guarantee you’re attracting the right people and simplifying the buying experience for your clients.
Conclusion
Selling wholesale is a very profitable business strategy that prioritizes brand development and product advancements above direct consumer sales (unless of course, you are both the wholesaler and the retailer). Beginning a wholesale company differs from starting a retail business.
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Frequently Asked Questions
How do wholesalers sell to retailers?
There are two ways that wholesalers sell to retailers. The first is through a distributor, which is an entity that takes on the responsibility of finding sellers and buying products in bulk for resale at wholesale prices. The second method is direct distribution, where the manufacturer sells directly to stores like Walmart or Target.
How do I sell my product to a retail store?
If you want to sell your product, there are many ways that can help you. You could go through a traditional distributor and reach out to them for their services. There is also the option of creating your own website with listings on it where anyone can purchase from you without having any intermediaries in between.
How do I approach wholesale?
Wholesale is important because it allows you to buy in bulk and get a better deal. On the other hand, wholesale can be difficult since there are several parts of this process that need careful planning to ensure success.
