The wholesale industry represents one of the robust economic sectors in existence. Not only do billions of pounds change hands on a daily basis, but the online community has now opened up a wealth of opportunities for those who are looking to snatch a piece of a potentially lucrative pie. Still, starting such an organisation from scratch can prove to be daunting and unless the proper steps are taken, the chances of failure are very real. Let us therefore take a quick look at some of the methods to embrace from the beginning as well as why choosing your customers represents a crucial phase.
Online Wholesale 101: Returning the the Rule of Supply and Demand
Understanding how to start a business can often become mired due to the presence of hindrances such as length explanations and technical hurdles. We will instead focus on what is arguably the most important factor of whether or not you can expect success: the concept of supply and demand.
The simple fact of the matter is that not all wholesale products will sell. Even if their bulk price is drastically reduced, they may not be in demand. Seasonal items are a perfect example. One of the costliest mistakes to avoid is assuming that you “know the market” when just starting out. Should you purchase a significant amount of inventory and be unable to liquidate these holdings, your wholesale dream can quickly grind to a halt.
This is why research is critical. What are some of the top-selling items on the market today? Which ones have provided proven returns? What actions have your closest competitors been taking? The rule of supply and demand is not biased and it has little interest in whether or not you eventually succeed.
Which Customers are Best for Smaller Wholesalers?
As an enterprise-level wholesaler, you generally have three types of customers to choose from:
- Retail distributors
- Retail businesses
- Wholesale distributors much like yourself
However, keep in mind that large retail businesses can be difficult to obtain as customers (they are likely already dealing with proven wholesalers). This is why your best option when beginning is to work with similar wholesale distributors within the online marketplace.
These entities tend to be searching for additional contracts and you could very well develop a lucrative relationship over time. Once your business becomes more established, it will then be possible to contact retail distributors and similar middlemen.
There is no doubt that starting any type of wholesale business is challenging and there are a number of technical aspects to take into account. This is even more relevant when discussing the buying and selling of bulk products. Third-party e-commerce platforms such as Shopify have been specifically designed for such purposes.
You will be provided with the framework and architecture required to hit the digital ground running and as a result, reaching the appropriate audience at the right times is much more of a realistic goal to achieve.