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Starting a Wholesale Business - the basics to consider...
by Startacus Admin
Think about it. Every shop or store you browse or go into is filled with products and merchandise that the retailer has sourced from somewhere else. It may be directly from the manufacturer or instead from a wholesaler or distributor who in a sense acts like the middle man between the retailer and the manufacturer. Wholesaling can seem a pretty simple yet lucrative business - buying something at a competitive low price and selling on for a higher price. Whilst this is a fairly simplistic view of what it entails, like with all businesses, there is a lot more to it. So, if you’re thinking about Starting a Wholesale business, here are a few of the basics to consider...
Select your Niche Choosing the products that you want to sell should be one of the first things that you do. Have a look at market trends and see what is currently selling. Check out blogs for upcoming trends or for an indication of what is in demand at the moment. It makes sense too if you have already got knowledge of a particular market sector and indeed a genuine interest in certain products. For example, if you love keeping up to date with what’s happening in the fashion world, you’d be in a stronger position to sell fashion related items - handbags, accessories etc than someone who has no interest at all in that industry. When selecting your niche, think too about the competition. If there are a lot of people already supplying the same or similar products, how are you realistically going to make an impact? Market research is key at this stage.
Locating Suppliers Once you have decided upon a niche, it’s essential to establish where you are going to source your products from. Spend time researching manufacturers and importers and find out all you can about them. Products may look fine on a website, but the reality could be a different story entirely. Check out dedicated wholesale forums where you can seek advice from other wholesalers, read reviews of particular companies and perhaps even get warnings! A simple trawl through Google may bring up lots of information - don’t simply rely on the info that appears on the manufacturer’s or importer’s website. The quality of the products that you source will of course have a direct bearing on your business and its reputation, so don’t cut corners - dedicate sufficient time to getting it right.
Finding Customers If you’ve done your market research properly, you should already know who your potential customers are. Whether your customers are small independent retailers or larger businesses, you’ll need to work out who they are exactly, what you can offer them and how you are going to approach them. Smaller businesses may not be able to buy in large quantities from you so will your business be able to survive if your customers’ orders are relatively small too? Will you concentrate on a specific geographic catchment area? Will you undertake cold calling - via the phone or in person? Will you simply sell online and create your own wholesale store? You’ll also need to think about establishing different price points for customers based on their order sizes. For example, will buying in bulk mean cheaper prices for your customers? It’s not just important to establish who your customers are, but to establish in detail what your proposition to them is.
Costs to Consider Generally when you are sourcing products to sell, you will find that you may be expected to place orders of a minimum size and monetary value. What you have to consider then is will you realistically be able to sell it all? If you aren’t confident that you could sell ‘X’ number of units, then why be forced into buying them? Perhaps look for an alternative manufacturer or even a different product altogether. The cost of your stock is not of course the only cost to bear in mind. Storage can cost too. When your stock arrives, will a spare room or garage suffice or will you need to rent an industrial unit? What about delivering your products to your customers? Should you factor in shipping and delivery costs when quoting your prices? Obviously you will have standard business costs to factor in too - from marketing costs through to accounting costs. Don’t assume it’s simply a case of buying something cheap, selling at a marked-up price and making a big profit.
We hope that these basic tips on setting up a wholesale business give you some food for thought. Got any others you’d like to share? Why not let us know over at the forum?
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