There are different ways businesses position their brand and develop marketing strategies for selling their products. These ways depend on the business plan and the type of product that the business plans to sell. Each company holds itself at some place in the supply chain process.
Some businesses are suppliers of raw materials, then some sell semi-manufactured products, and then some companies offer the final product to the end consumers. The earlier a business is placed within this supply chain system, the more likely it would sell its products in bulk. In other words, it would be a wholesale business.
What is a Wholesale Business?
The term ‘wholesale’ is usually used for two types of business models:
- A business that buys goods in large quantities from the manufacturer keeps them in a warehouse (i.e., manages warehousing), and then resells them;
- A business that produces its own products and sells them directly to retail outlets in bulk, which sell them to the end consumers.
The former is also referred to as a distribution business. In both cases, the purchasing and selling is done in large quantities, which means the selling price of goods is lower in selling wholesale compared to a retail business. But that is not the only difference between a wholesale and a retail business.
Differences Between Wholesale and Retail Businesses
Let’s discuss the differences between a wholesale business and a retail business.
1. Cost
The cost of buying materials for a wholesale business is relatively cheaper. This is because a wholesale business purchases material in bulk and is not too conscious about the quality. Retailers usually buy from wholesalers at a higher price because they can sell the products at an even higher price and maintain a good profit margin for themselves. Even if a business manufactures its products itself, it will sell them at a high price to cover its manufacturing costs. The image below shows a business selling good-quality ice cream and taking orders for it online.
Image taken from Strikingly user’s website
2. Business Size
A wholesale business is more prominent than a retail business. Imagine a boutique operating from a small retail outlet in a shopping mall, selling different dresses at exclusive prices. They have 5 staff, including a shop manager, sales assistants, and an outdoor guy. They buy the dresses in bulk from a supplier with an extensive manufacturing facility and hundreds of factory workers who stitch the dresses one by one. In this scenario, if the size of each business is measured by the floor size it’s occupying, the number of employees it has, and the number of products it sells every month, the wholesale business would come out to be a lot larger than the retail business.
3. Capital
Since selling wholesale requires bulk manufacturing, the capital expenditure budget needed to start the business is also huge. You need to lease or rent an enormous property to build a factory to manufacture the goods. A retail business may or may not require a considerable amount of capital. Suppose you are opening a fancy boutique in a shopping mall that targets the elite class and primarily sells branded products. In that case, you might have to invest hefty amounts in your unit’s renovation and security deposits. But if you choose to open a small shop on the street with no extra renovation and simple shop design, then you can start your business with low capital.
4. Business Outreach
The business outreach of a wholesale business is usually massive. A distribution business may have only a few buyers that are sufficient for a sustainable source of income. But to get those few buyers, they probably have to open their distribution outlets all over the state or in different states. A retail business can efficiently operate from just a single outlet, depending on its size and the phase of growth. In the example above, the fancy boutique in an elite shopping mall might be the only outlet for that boutique business. Any other marketing that they do could simply be through digital media or billboard advertisements.
5. Art of Selling
A wholesale business does not really require a particular art of selling. They have to make themselves available in different localities and spread the word that they are there. But a retail business needs to make a lot of marketing effort as marketing campaigns, special offers, direct marketing, and other paid promotions. Since retailers sell their products at a higher price, they need to focus on their branding and positioning to see their products as having high value. Besides promotion, they need to display their products attractively so that customers can get indulged in instinctive buying. Even if they are only selling their products online, they need good quality product photography to attract customers into buying.
Image taken from Strikingly user’s website
Things to Consider for Starting a Wholesale Business
If you are wondering how to start a wholesale business, you need to consider a few key things before making that decision.
1. Identify Different Wholesale Business Opportunities
The first thing you need to consider is identifying the different wholesale business opportunities and then deciding which one to take on. Some of the wholesale business types are as follows.
• Merchant Wholesalers
These businesses purchase large volumes of goods and sell them in smaller quantities with a small market markup.
• Brokers
Brokers rarely own the goods they sell but act as intermediaries between wholesalers and clients. Their job is to negotiate a deal between these two parties and earn commission out of it.
• Sales and Distribution
Sometimes a manufacturing business looks for a distribution business that can sell the products through its distribution outlets. This means the manufacturer reaches out to wholesale dealers and offers their goods to them in wholesale deals tailored to their market needs. This happens when the manufacturer outsources the sales and distribution of its goods to a wholesale business.
2. Choose the Type of Wholesale Business to do
Now that you know the different wholesale business opportunities, you can choose one that fits your business idea, budget, resources, and passion the most. Look into your experience and observe what kind of networking you have. Choose a path that would be workable for you and has the most tremendous potential for success and growth.
3. Build an Online Presence for Your Business
A crucial part of starting your wholesale business is to build an online presence for it. Whenever someone hears about your business, the first thing they would likely do is search for your brand or company name over the internet. That’s why you need to create a brand image for your business, even before starting out with your operations.
Online presence for a wholesale business can be built in two simple ways. Preferably, a business must use both methods and link them together to have the best effect.
• Build Social Media Pages for the Brand
Social media marketing is popular and effective these days. If your brand name or promotional ad goes viral on social media, your business will guarantee take-off. Therefore, it is recommended for anyone to create social media pages that represent your brand. You can choose the social media that suits your wholesale business type and personal preferences the most. Some make a YouTube channel for their business, while others promote their brand through a Facebook page. If you are already a successful Youtuber, you can cash on your followers to directly promote your new business to them. If you have a website for your wholesale business, it is good to link your social media pages or channel to your site.
Image taken from Strikingly user’s website
• Develop a Website for Your Business
The other way to build an online presence for your wholesale business is to develop a website for it. This is not as hard or costly as you might think. All you need to do is sign up for a free account at Strikingly. Choose a website template from the options that you’ll be given. Go to the editor and use the drag-and-drop feature to insert your web content into the web pages. You can even embed videos into your web pages from third-party video platforms (e.g., YouTube and Vimeo). For your web content, key in some basic information about your wholesale business. Talk about what you are offering, and give your business contact details. Finally, include some call-to-action buttons to point customers in the right direction if they are interested in your products.
Image taken from Strikingly user’s website
At Strikingly, we encourage our users to start a website for their brand and promote their site with a lot of content marketing. We regularly mention and promote our users’ website and their business at our Strikingly blog to give them SEO benefits. We provide you with the most straightforward website builder that enables you to build your very own website with no programming language at all. We support you every step of the way through our 24/7 live chat feature, where you can ask us questions about our tools. We understand that business owners have many issues to tackle, making the web development part of your business as easy as possible.
