Are You Ready for Wholesale? 7 Ways to Know if You’re Prepared
The decision to break into wholesale can be incredibly daunting for a business. Offering products wholesale is a huge step with lots to consider. Who will be selling your products? Can you handle the volume? What will your margins look like? It can be overwhelming, especially for younger businesses!
To help, we have compiled a list of top seven things to consider when thinking about taking on retailers and selling wholesale. Let these tips be an outline for you to consider, but remember, every business is different. Do what is best for your unique situation.
1. Consider Your Products
This might seem like an odd suggestion. You obviously already have products, so what is there to consider? First, think about what you sell. Is it something other retailers would be interested in selling to their customers, something they could work into their existing product selections? Is your product line cohesive enough to attract retailers? These are all questions you should be asking yourself when considering going into wholesale. Your products are the selling point.
Next, think about what makes your products stand out and then use that in your sales pitch when talking to retailers or listing your products on a wholesale marketplace. You want the benefits of your products to be clearly listed and a focus of your sales. Perhaps you use a particular method to make your product. Or maybe you source all the materials locally – or somewhere unique and exotic. These are all things you should tell retailers in your pitch. Let them know what makes your products worth investing in.
2. Handling the Volume
This can be the make or break for wholesale. If you can’t handle the volume of wholesale, it might not be the right time for your business. You’ll need to consider not only production, but warehousing and distribution. Do you only produce in small quantities? Could you increase production if needed? Do you have the warehouse space to hold these increased quantities until they sell? How will you distribute these large orders?
If you’re currently the person who does all the packaging, then consider hiring out for this. Packaging and shipping large orders can be quite the undertaking, and you need to be prepared for it. This could mean hiring someone to help you package and ship orders or outsourcing to a fulfillment center. Warehousing is also something to consider as your scale your wholesale. As you take on more retailers you need more product and more warehouse space.
Since handling volume includes shipping, you could also consider dropshipping. Dropshipping is when a retailer sells your products without holding inventory, and you ship them out on their behalf, directly to their customer. This is something a lot more retailers are looking into. It is a great way for them to avoid investing in a large amount of inventory and warehouse space. You might give a smaller discount in these cases since you’re handling the logistics, but it is definitely something you should consider offering if you feel you could handle those additional orders.
3. Pricing For Wholesale
Wholesale pricing can be a big challenge that many new wholesalers don’t consider right away. First, you’ll want to consider if your pricing structure makes sense. Do you sell one product in large amounts, or would a large order of multiple products count as wholesale, regardless of what products are in the order? While thinking about this, consider what businesses are targeting and what quantities they would likely be able to order. Then think about pricing for different businesses, such as offering tiered pricing for different business sizes and order volumes. Offering Net 30 and Net 60 terms is another consideration to keep in mind.
Along with this, consider if your margins are good enough to offer a proper discount to someone who purchases wholesale. Wholesale prices are often 40-50 percent lower than retailer prices. Do you have enough wiggle room to offer retailers pricing that low? Remember, retailers want to make money from your products as well, so a 10 percent discount won’t be enough for them to buy your products.
On the other side, you also need to make sure you aren’t under charging. You don’t want to lose money on your wholesale orders, otherwise it won’t be sustainable. Depending on your operating costs and the costs to make your products, there will likely be a sweet spot where you can set your pricing for wholesale to ensure both you and your retailers are successful.
4. Know Your Audience
I have mentioned this a few times already, but the kind of retailers you target is going to make a huge difference in so many things. First, can you handle a large retailer like a department store, or are you looking for more boutique sellers with smaller businesses? You’ll not only need to consider volume, but also any rules or requirements that that retailer has for suppliers they work with.
Larger retailers often have rules around what happens if your product sells and who take the hit if there are losses. This can make working with chain stores and department stores difficult and expensive. Lisa of Mien Studios talks about this in her interview with Handshake. If you’re just getting into wholesale, then starting with smaller retailers may be a better choice. You can get your feet wet, so to speak, and learn as you go with less risk than jumping right in with a large seller.
Also, consider what kind of stores your product works best in. Is it something that would do best in a more general store, or do you sell a very niche item that would do better in a more niche store? You need to consider this when reaching out to retailers and when you brand your wholesale side offerings to ensure you’re reaching the right stores.
5. Product Images
I’ll keep this one short, but product images are something suppliers often don’t consider. The photos you use on your B2C website might not work for B2B. Usually you’ll want a more plain image. White background, showing the product exactly how it will look without anything else in the way. You can also have pictures showing your products in flat lays or on a model, but using an image of the product alone as your main image is best.
If you don’t already have very high-quality images, I would recommend taking them yourself or hiring a professional to do it for you. It can be quite the investment, but it will make a massive difference in both your B2B and B2C sales. They say a picture is worth a thousand words; a good quality product photo can be worth a thousand sales.
6. Preparing For Sales
Next thing you’ll want to prepare for is sales. This can be a different ball game with wholesale. You may have a lot more direct contact with the buyer and more follow- ups than with your B2C business. But before you get to that, concentrate on how you’ll get those retailers to buy and where you’ll be finding them. Of course I can’t talk about finding retailers without mentioning wholesale platforms like Handshake. Handshake helps by attracting retailers to one central place where they can browse our thoughtfully curated wholesale collections from emerging and reknwoed brands.
But don’t put all your eggs in one basket. You can have your products on wholesale platforms and also reach out to retailers directly if you think your products would fit their store. Advertise wholesale directly on your website telling potential retailers to reach out to you if they are interested. There are lots of options out there to find more wholesale distributors, you could list your products with them.
I know despite being business owners, many people are not comfortable selling their business or products to others in any kind of direct way. I totally get it – you don’t want to come across salesy, but sometimes that is what you need to do. Pitching your products can be a big part of wholesale. You aren’t just convincing them to buy one product one time, but to invest in your business through their own business. It is a really big deal. You need to be prepared to prove that your products are worth their investment.
Once you’ve made that first sale, it doesn’t stop there. You need to follow up with those businesses to see how they liked the products, how their customers liked the products, and show them any new products you will be offering. Following up with businesses that already have purchased and liked your products is much easier than generating new wholesale customers. They are more likely to place larger orders as well since they already trust you and your products. Build a relationship with your retailers; it will make a world of difference.
7. Packaging and Promotional Materials
I find that this is the last thing new wholesalers will consider, which is why it is last on our list. If your business is currently online, but you’re looking to sell to retailers with brick and mortar stores, you’re going to need to consider how they should display your products in their store. Will it require special shelving with your brand on it? Do you need to give them signage or stickers for outside or around the store? You could also prepare online promo materials for them to post on social media to promote selling your products in their store.
We touched on it earlier, but you’ll want to consider how you’re packaging large orders, including things that may need to be added to your shipments like inserts, in-box promo, and ingredients lists. These will need to be made in advance and available to your fulfillment team prior to receiving orders.
You might also get questions from retailers about white labeling. If you have a product that a retailer might want their own brand and logo on, would you be willing to offer a whitelabeling service? It could be a great way to boost your wholesale sales. If you have the means to do so then it is definitely worth considering.
So now you should have an idea of what you’ll need to prepare for when taking the leap to wholesale. Selling wholesale is a big decision, but it can also be an incredibly rewarding one. It’s always worth remembering, you can start off small and build up over time, adding retailer by retailer. You’ll learn more as you grow! If you want more information, check out our How to Sell Wholesale to Retailers article for other excellent tips.