Facts About the Wholesale Business

jefferson john babasa asked:

In commerce, wholesalers work as the middle man that makes sure that the products reach their end consumers by means of distributing the products through retailers. The process of wholesaling involves buying the products in large volumes from manufacturers then redistributes it to retailers which in-turn sells the products to the end consumers.

Wholesalers became popular with different business entities because it allows manufacturers to reach organizational buyers or retailers, and allow certain business buyers or retailers to purchase products which are otherwise impossible to purchase.

According to the 2002 census of wholesale trade made in the US, there are an over of 430,000 wholesale operations going around in the United States.

Before starting a wholesale business, one should know about the facts surrounding this line of business such as its benefits to other business entities. Wholesalers provide advantages that both the manufacturers and retailers can benefit from.

Benefits for the Retailers

Retailers benefit largely from wholesalers because of a few reasons such as:

An easier way to get their products.

Doesn’t require minimum order requirements.

Allows smaller retailers to compete with larger competitors.

Aside from wholesalers and distributors, manufacturers also sell their products directly to retailers but pass out a minimum order requirement for their products. Large retailers can easily go around this condition but smaller ones can have a hard time attempting to go around this constraint.

Retailers make use of wholesalers in the purpose of buying products which is otherwise impossible to buy straight from its manufacturers. Since wholesalers sell to a large number of buyers their order quantities may match those of large retailers thus allowing them to obtain lower prices from manufacturers. This in turn will give smaller retailers the advantage of buying the same product such as those that larger retailers are able to buy without the constraints that manufacturers pass out.

Also, by providing this kind of benefit, smaller retailers can easily compete with larger retailers. In this way transacting through wholesalers is often the only way certain retailers can stay in business.

Visit a wholesale clothing shop or online wholesale clothing shop to learn about how one can get their stock for their retail or wholesale business.

Benefits for the Manufacturer

Aside from retailers, manufacturers can also benefit from wholesalers as well because:

Wholesalers can provide manufacturers a wide array of retail outlets.

Opens new market possibility for the manufacturer.

Easily put new products out on the market.

As well as providing help for retailers to have access to products they cannot acquire, manufacturers can also benefit from wholesalers largely as it opens additional market opportunities for manufacturers. Since wholesalers deal with a number of retailers, manufacturers can broadly distribute their product throughout the country if not the world.

Another thing that manufacturers can benefit from wholesalers is that they can easily put out new products on the market. A few retailers rarely buy new products from manufacturers simply because retailers are not sure that this product could even sell. Wholesalers can provide help for manufacturers to distribute their product mainly because wholesaler can yield power with the smaller retailers convincing them to stock the new product.

Considering a wholesaler can serve hundreds of small retail customers, the marketing efforts required to persuade the wholesaler to adopt a new product may be far more efficient compared to efforts needed to convince individual store owners to stock the new product.

For wholesale clothing needs, visit any online wholesale clothing store or visit Seven Wholesale to learn how.

Problems that Wholesalers Face

One of the facts that anyone should know about wholesaling are the concerns that every wholesaler face. Though the wholesaling industry has served an important role in the distribution process and has grown significantly since its formation, the problems they face today have also grown as many wholesalers fight to maintain their market position. Among of those concerns include:

Location. Some wholesalers pay little attention on the location of their business, but smaller wholesalers face the problem of choosing the right location closer to their retailers. The cost of land on some parts of the world had risen so high that using those locations for a wholesale business may not seem reasonable. In addition to land costs, facility location is also affected by access to adequate transportation, such as roads, seaports, airports and rail terminals.  Areas with available land often lack the infrastructure needed to run wholesale facilities unless expensive and time-consuming improvements such as sufficient parking slots.

Transport. Associated with location is the cost of transport. Transportation cost had also begun to become a huge problem with a lot of wholesalers, especially the smaller ones. Because of the fuel problems happening throughout the world, wholesalers are having a difficult time in managing their expenses on the cost of shipping their stocks to their retailers. Transportation expense can represent a significant portion of overall distribution costs and these higher costs are often passed on to customers in the form of higher product prices. Because of this, wholesalers are often pressed to use technologies present today to assist them in managing their transport cost more efficiently such the use of fuel efficient transports; utilizing computer routing software to determine less costly delivery routes; and many more.

New Technologies. Adapting to new technologies that help in assisting in everyday processes are among of the most expensive part of growing a wholesale business to success. Utilizing these technologies, such as those mentioned above, can certainly help in managing a business, but this impose more expenses as these technologies doesn’t come cheap.

Disintermediation. Disintermediation is among of the major problems that wholesalers are facing right now, especially because of the internet. In economics, disintermediation is the removal of intermediaries in a supply chain or simply “cutting out the middleman”. Instead of going through traditional distribution channels, which had some type of intermediate, such as a distributor, wholesaler, broker, or agent, companies may now deal with every customer directly, for example via the Internet. Buyers bypass the middlemen, wholesalers or retailers, in order to buy directly from the manufacturer and thereby pay less. Take for example a wholesale clothing business: retailers could get less if they buy straightly from the manufacturer instead of getting their stock from a wholesale clothing store. In this situation if the manufacturer begins to offer direct purchasing to smaller customers the wholesaler may have little leverage in efforts to retain the retailer as a customer. In instances of disintermediation wholesalers face the challenge of creating greater value for their services, thus making the retailer’s decision to switch more difficult.

Wholesaling has become a huge trend in the world of commerce. Many individuals that owned a retail business are shifting their focus on starting a wholesale business. But be advised that wholesaling takes on a larger responsibility as you will be the one responsible for distributing the manufacturer’s product to the retailers and maintain your credibility with both the manufacturer and retailers. So before starting a wholesale business, make sure that you’ve made a clear and thorough study about the facts, the process, and the factors that affect the success of a wholesale business.

Check out what Seven Wholesale and its collection of wholesale clothing can provide a business of clothing retail store or wholesale clothing store.

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