How Selling Wholesale Can Boost Your Business
Many ecommerce business owners start small: an online shop or retail location, a handful of new products, and maybe an employee or two. But there comes a time for nearly every startup to make a leap. Selling wholesale can be that leap, allowing small businesses to grow and sell in bulk.
Selling wholesale presents the opportunity to reach broader audiences, stress less about individual sales, and increase profits. But it requires the right preparation, too.
Before diving into wholesale selling tips, let's take a look at what 'wholesale' is and some perks that come with the territory.
What is Wholesale?
Wholesale is the act of selling your products in bulk to a third party, so they can sell those products at a mark-up to their customer base. When someone places a wholesale order with you, you're offering your products below retail price so the receiving party can make a profit.
The Benefits of Wholesale
On the surface, it might sound like you're losing out. But there are numerous advantages to selling wholesale:
- More time for your business: When a wholesale partner sells your products, you're free to work on improving your brand, marketing your company, and developing new products.
- Reduced impact from market changes: If you're selling your products to individuals via the traditional retail model, economic and market shifts can hit fast and hard. When you're selling high-volume amounts to third parties, there can be latency between shifts in customer habits and your business because your clients are buying in bulk.
- Fewer marketing costs: Marketing is expensive when you're selling directly to consumers. When you have wholesale partners, you're marketing to a smaller audience while still driving sales.
- Broader brand visibility: Selling to individual retail customers requires laser-sharp focus on your audience. When you sell to a wholesale business, your customer base naturally expands (often in unexpected directions).
Your time is valuable. Selling wholesale gives you some time back while potentially driving your profits. It’s a rare situation where everyone involved wins, but it does require some foresight.
6 Tips for Selling Wholesale
The world of wholesale selling can build brand awareness, attract new customers, and help grow your business. But the wrong moves can result in high volume loss and a significant waste of time and resources.
The following tips will help you partner up with the right businesses, sell in bulk, and boost your bottom line.
1. Identify retail stores
The first thing to do is identify retail stores to sell to. When you developed your product, you likely had a target customer (or customers) in mind. Think about these audiences and look for retail outlets and online businesses that target similar groups.
You can also dig around online and see which boutiques and ecommerce sites are trending, both locally and nationwide. From there, reach out to store owners and tell them you're interested in selling to them wholesale. Tell them you want to hear more about their customers and which of their products are best sellers.
2. Develop a pricing strategy
Every item you make isn't guaranteed to be a good fit as a wholesale product. Wholesale products do best when the profit margins are already fairly solid, meaning they don't cost you much to make but sell well at a higher price.
A good rule of thumb for wholesale pricing is to take whatever it costs you to make the product and double that amount. Doing so gives you a profit margin of 50% when selling to wholesale partners, but still leaves room for the receiving party to mark up the price and make a profit.
Set a minimum order quantity for wholesale products. This way, you have a clear idea of your margins before an order is placed. You also want to ensure you're not undercutting your own suggested retail price if you're still selling wholesale items in your retail outlet or in your online store. Wholesale orders should be cheaper per unit, but not so low that your wholesale partner can undercut your retail prices.
3. Consider a standalone wholesale site
When setting up your wholesale business, it can be tempting to forgo a wholesale site and simply use a paper or digital order form. However, keeping your transactions strictly offline can result in a rocky experience for your wholesale partners and make bookkeeping harder on you.
Instead, create a website specifically for wholesale buyers. Doing so will allow them to have their own login info and shop from your wholesale site as if they were browsing a traditional ecommerce store.
A wholesale site makes it possible to display wholesale-specific pricing, and allows for easier segmentation of your wholesale and retail orders. This makes bookkeeping much easier, especially if your wholesale site is synced with an accounting program.
4. Contact potential wholesaling partners
Build a list of potential wholesale partners — such as retail stores, wholesale businesses, and supply chain partners — to see who would be a good fit for your product and your audience. Then, start reaching out to see who's interested in working with you.
Avoid using a template email and personalize the communication instead. These companies are potential vendors, so showing genuine interest is integral to relationship building.
Don't come right out of the gate asking for a partnership. Introduce yourself, mention what it is you do and why their business interests you. Consider mentioning a product or blog post from their site (if they're in ecommerce), or compliment their local retail establishment.
5. Network, network, network
Networking is always a good idea in business, especially when you're building a wholesale group.
Trade shows and even life science conferences are a goldmine when it comes to meeting talented craftspeople, business owners, and drop shipping partners. Stock up on business cards and meet everyone you can. You never know when you might meet your next wholesale vendor, someone with your next product innovation, or a collaborator who can improve the logistical side of your business.
Trade shows are also a great way to meet your potential wholesale customer base. There will always be other business owners at trade shows and people who might be interested in your products from a retail angle. Either way, this exposure can only help you.
Don't forget to tap into social media as well. LinkedIn is a useful tool for connecting with other business owners and potential wholesale partners. Local Facebook groups can also connect you with retail businesses.
6. Take advantage of online stores
While physical retail outlets are a shoo-in for wholesale, don't neglect major online players.
Etsy used to allow wholesale, but has since closed that division. However, wholesalers can still reach large online audiences via eBay and Amazon.
Many eBay wholesalers buy in bulk and then sell on eBay. Search for products similar to yours and contact the sellers directly to see if they're interested in becoming a wholesale buyer. This person could then purchase from you like a regular wholesale partner and sell your products on their eBay shop.
Amazon wholesale works very much the same. Look for Amazon stores selling products similar to yours, then reach out and see if they'd be interested in buying from you. From there, they can sell your products on their Amazon shop, allowing you to reach a large online audience without having to do the heavy lifting of optimizing listings.
Growing with Wholesale
The world of wholesale is large and often daunting for newcomers. But remember: You're still selling to customers — they're just buying a lot more than those shopping on your site or walking into your store.
Do your research when looking for wholesale vendors. Don't rush into anything you're not comfortable with, and be sure to involve any business partners or relevant parties.
It will likely take time to land your first wholesale partner. Still, your hard work will be rewarded with lower marketing costs, a larger customer base, and the profits and time necessary to grow your business beyond your wildest dreams.