How to Scale Your Retail Business Through Bulk Selling
At some point, every business owner will face the dilemma of scale. Whether you’re opening a second store, doing a weekend trade at crafts fairs, or selling online, the question is the same for everyone: how to grow your business and increase revenue when you only have so many hours in the day.
One of the simplest ways to scale a successful retail business is to sell more products (of course, this is easier said than done). But one common approach to achieving higher product sales is through wholesale selling. Wholesale selling is a great way to scale your revenue without a heavy investment into marketing and advertising.
Instead of trying to painstakingly increase the number of customers you sell individual products to, you can simply sell a large number of items to a handful of wholesale buyers.
Despite the simplicity of wholesale in theory, there are some factors you’ll want to take into consideration when deciding whether wholesale is the best approach for your business model and offering.
Dissecting Wholesale Opportunities
There are some variations in how wholesale opportunities will look depending on what type of product you sell, but on a basic level, “wholesale” refers to any sales opportunity whereby you sell a large quantity of your product (usually at a discounted “wholesale” price) to a second-party retailer that will resell those items to their own customers.
If you sell any sort of physical product, there will almost certainly be some opportunity to get into wholesale. You can also sell in bulk to your customers on credit. Store credit allows customers to easily interact with you and you can keep track of your payments through apps like Oscar Udhaar. This app will help your store in selling items in bulk on credit so that you can also increase your customer base.
Pros and Cons of Wholesaling Your Products
There are many benefits to wholesaling your products:
Increased order volume: You can implement a minimum order threshold and offer pricing tiers to incentive a high volume of orders per wholesale buyer.
Consistent income: If your wholesale buyers find that your products are successful in their stores, they’ll continue to order from you — and you’ll generate consistent income (possibly even more around holidays).
Marketing support: When your products are being sold by other retailers, they may be doing their own marketing for the products in addition to your own marketing and advertising efforts.
Increased product exposure: Because your products are featured in other retail stores, customers who otherwise might not know about your store will see your products. They’ll be able to find out more about your business and offerings, as well as purchase your products where they already shop.
However, there are a few potential negatives which you’ll want to take into consideration when making the decision to move into the world of wholesale:
Lower profit margin: You’ll have to sell your individual items at a lower unit price in order to make it worthwhile for a retailer to sell your products and make a profit themselves.
Requires higher volume of production: Before you can sell on wholesale, you’ll want to make sure your production methods are able to handle a high volume of orders in a timely manner.
Potential loss of marketing control: It may be harder to control all marketing messages if your wholesale buyers are promoting your products through their marketing channels; although you can define what is acceptable in your terms and conditions.
Delayed payment: Depending on the terms you agree, you may not receive payment right away for your first shipment. Many retailers will want to pay up to 30 or up to 60 days after receiving your invoice. You’ll need to have enough capital available to float the cost of manufacturing until you receive the payment —so it pays to plan ahead. Alos, as mentioned earlier, an app like Udhaar can help you track your payments efficiently.
Different sales strategy: Even if you’re very successful in the market, you’ll have to develop a different sales strategy for pitching to retailers and wholesale buyers. Wholesale selling is very relationship-based and requires you to be comfortable going to sales meetings and pitching your product line 1:1 to a retail buyer.
So, how is wholesale any different from the direct-to-customer selling you’ve done so far? The most obvious difference is that you’re dealing with a business rather than an individual, and they’re making decisions based on how much money your product will make them rather than buying an item for themselves. You won’t be able to rely on marketing the product as an experience; instead, you’ll want to set up your system to make it as easy as possible for the buyer to get your products out on their shelves and selling as quickly as possible.