The profits inherent in the system of sourcing products from wholesalers are attractive to many entrepreneurs engaging in all types of commerce. They are attractive because they are obvious and obvious because the whole thing works according to a quite simple principle.
One economic constant is that volume buying works out cheaper than purchasing individual units. Accordingly, the retailer makes the volume purchase, and the customer makes the individual purchase. It is therein that money is made.
However, the principle may be simple, but things get considerably more complicated in practice (otherwise everyone would be doing it). Successfully making a profit from wholesale products requires the infrastructure (physical or virtual) to actually sell them.
It also requires the marketing to draw in customers and effective supply chain management to keep the whole thing running smoothly.
Going back to the simple economic principle behind wholesaling, it is in the interests of any retailer not only to manage this efficiently, but to try to maximize the profits that can be made from the simple business of selling something for more than you paid for it. And there are many ways of going about this.
The Right Products, The Right Wholesaler
There are many different products that can be sold wholesale, but it’s pure folly to assume you can just pick anything. Acquiring the products is one thing, but it is the retailers job to actually sell them. Doing this, of course, requires an attractive outlet (online or off), and effective marketing. And how you go about this task will be dependent, above all else, on what you’re actually selling.
Another vital component of the product selection is variety. It is always sound business advice to try to create multiple revenue streams. This will make any business resilient to fluctuations in demand and other challenges that are unlikely to affect all products uniformly. Consequently, if one product is selling badly, others might be able to pick up the slack.
Olympic Eyewear, wholesalers of designer sunglasses, report that this particular product is particularly good for creating these auxiliary revenue streams. This is because sunglasses are inexpensive, attractive, popular and, perhaps most importantly, they come in a range of different styles and colors. It is precisely this variety which ensures the widest possible appeal for customers. And here’s the neat thing – designer sunglasses can come in assorted wholesale batches, meaning that variety can be offered without purchasing from multiple sources. This example illustrates well the need for a good wholesaler, and variety within each batch is a sign of a good one.
Sorting out the right product and the right wholesaler is the best place to start. But after that, there is much more you can do to optimize this apparently simple business model.
Look for Discounts
With wholesaling, the price you pay per unit can get lower and lower if you buy more and more. If you have the capacity to shift the inventory, it is always a good idea to get as much of it as possible. However, you must also…
Ensure Supply Chain Efficiency
Any time your products spend out of stock is money wasted. Therefore, you need to pay close attention to the supply chain and select a wholesaler who values transparency. You need to know ahead of time if any shortages are coming up.
Ensure Wholesaler Flexibility
Furthermore, you should ensure that if demand changes your supply can change to meet it, and quickly. You should be able to effortlessly change your arrangement with a wholesaler as demand changes.
Wholesaling is a quite simple economic principle – maximizing the profit from it takes careful planning.