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.
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