Wholesale marketing

The Wholesaler is a person or company that sells goods in large quantities at low prices, typically to retailers.

The Benefits:

1.      You’ll save money and make more money.

Wholesale marketing involves buying in bulk, direct from the manufacturer, as opposed to going through a middle person. The latter will result in you eating the markup fees by the third party, whereas the former will have the items priced at the manufacturer’s own rates.

To cover for this, the producers will often require that you buy the goods in the tens of thousands. But if you average the cost of each item, you will see savings for up to 50 percent than if you had bought from a third party.

You can recoup the costs by providing your own markup. You may have heard of wholesalers who have marked increase in profits practically immediately after they start. That is possible if you do a considerable amount of research, so you can base and adjust your prices on the influx of the industry.

2. You’ll create and propagate your own brand.

As mentioned above, wholesaling will usually entail the goods being rebranded under the wholesaler’s own umbrella. Real-world examples include grocery or department store items running under the store’s own brand, like Kroger Soda or Target Table Napkins.

But of course, these big chain stores don’t create their own foodstuffs or party supplies—they purchase them wholesale and then put their own name on it. That way, their brand gets reinforced, creating advertising in the very products that they sell.

As a prospective wholesaler, you’ll have the opportunity to do that as well. Deals between manufacturers and buyers often include this clause. In the consumer’s eyes, the manufacturer’s role will be all but invisible, and that of the wholesaler will be the most prominent.

No matter what you’ll be buying—USB flash drives, ballpoint pens, LED televisions—you can stamp your name on it and ignore the manufacturer entirely. With a few select and quality items, you’ll be able to establish a strong brand.

3. You’ll familiarize yourself with industry knowledge.

As you eliminate the degrees of separation between yourself and the actual source of your goods, you will be that much closer to understanding the workings in the industry of that particular item.

·         Details–such as the flow in the supply chain, who has the lowest prices, and the external operations of the various companies—are just some of the things you’ll be privy to, with a little observation and savvy.

·         If you source your products from multiple suppliers, or have discarded an ineffectual supplier for a better one, you’ll be able to see just what the differences are between the two of them.

This knowledge could be useful in the future. Who knows? As your business finds greater success, perhaps you’ll be able to become a manufacturer yourself.

4. You’ll build a network of suppliers.

Wholesaling naturally leads to contacting various manufacturers to see whether or not you will purchase from them. You can correspond with the manufacturers directly. But in this early stage, it is advisable that you join a network of affiliates who already have an established wholesale directory.

To get in good with certain suppliers, this network will be able to provide you with the clout that you probably don’t possess yet. This will provide you a leg up with discounts and exclusive access to products, as well as an effective learning environment, so that you’ll learn more about the practice of wholesaling and the products you’re selling.

Disadvantages:

1.   Capital

In the wholesaler’s point of view, he should have a big capital to buy the product from the manufacturer and thenhave enough logistics to distribute the product to buyers. In this case, big trucks are needed to contain the large amount of goods to be sold throughout the day.

If the goods were not all sold, most of the time, the wholesalers cannot return the goods to the manufacturers. One of the examples is wholesale fish, which the wholesaler bought from the fishmongers. The wholesaler doesn’t have a choice but to find means to sell the catch even at a very low price.

2.   Quantity

In the buyer’s point of view, wholesaling is not good when it comes to quantity. If there is one or two items that he would like to buy from the wholesaler, he will not be able to do it.

Wholesaling is dependent on quantity, which means that he can’t purchase the items that he wanted alone. The buyer has to buy a minimum number or amount of products dictated by the wholesaler.

3.   Discounts

Asking for discounts is a disadvantage most of the time in the retailer’s part. People would think that the retailer has purchased the goods at a very low price since they were from wholesale.

This is true at times, but buyers fail to consider the retailer’s expenses on transportation, VAT, and human labour. Knowing that the goods were bought from wholesale would also decrease their market value in the perspective of buyers.

4.   Competitive pricing

It is hard to set a good price when the good was bought from wholesale. The retailer will have to compare his goods with other retailer before he can set his own price. This is to avoid over and underpricing which would confuse the buyers.