Want to know how to manage your wholesale inventory effectively? We have the...
Read MoreThe 10 steps on how to manage a wholesale business to success
By Robert Taylor
Co-Founder & CTO – Salesorder.com
The eCommerce sector has seen incredible and unprecedented growth in the last few years.
Times are tough, and consumers are tightening their belts, but that hasn’t sated their appetite for online shopping and the industry is expected to grow by more than 10% each year.
Most of that growth has been focused on direct-to-consumer (DTC) brands, but retailers rely on wholesalers to keep their warehouses stocked and their customers happy.
The benefits of B2B eCommerce are clear, and this could be the perfect time to take advantage of them.
In the following guide, we’ll discuss some of the things you need to know about getting a B2B brand off the ground, including:
- How to start a wholesale business
- How to manage a wholesale business
- The software that can help you
Ready to get started? Keep reading for 10 top tips on how to run a wholesale business successfully.
1. Create a solid but flexible business plan
A good business plan is the cornerstone of every successful business. It lays the foundations and outlines your roadmap to success. A wholesale business plan provides the following benefits:
- Delivers insights into future financial needs
- Assists with the development of future growth strategies
- Helps to attract investors
- Gives lenders insights into the direction of your business
A mission statement
What is the company’s purpose, what questions does it answer, and what problems does it solve? The mission statement is your answer to the question, “What are you and what do you stand for?”
Business objectives
This section should describe all financial, operational, and strategic objectives.
Competitive analysis
You’re probably not the only wholesale business in your target sector. You will have competitors, and this is where you talk about them. Describe who they are, who they serve, what their strengths and weaknesses are, and where you have an advantage over them.
Market analysis
A market analysis shows that you understood your industry. It should address areas such as the size/value of the market, the trends affecting it, and its projected growth over the next few years.
Customer analysis
Outline the customers that you serve or expect to serve. What is your target demographic? What kind of promotions do they respond to the most? Why will they use your products and services?
Marketing plan
A good wholesale marketing plan must address several key factors. These include the type of products you’re offering, the price point (and how it compares to your competitors), the importance/challenges of your location, and the means you will use to drive traffic and sales.
Your unique selling point (USP)
If your mission statement answers the question of “what” then this section addresses the “why”. Why should customers choose your business over one of your competitors? What do you have that they don’t have?
An executive summary
An introduction to your plan that summarises everything it contains. The executive summary engages the reader and provides them with a succinct overview of each key area. It’s usually the last thing that you write, as you’ll need to consider all of the other content when writing it.
2. What's your pricing strategy and how is your offering different?
Wholesale businesses typically work with huge volumes and low markup. They usually offer discounts for larger orders, thus incentivising customers to order more while providing them with extra value. To ensure consistency and continued profitability, the pricing strategy must be set in advance. Consider the cost of the product, the desired margin, the wholesale price, and the recommended retail price, as well as how these things are impacted by discounts.
It’s not just about the price, either. If price is your only USP, you are constantly at risk of being undercut. You need something else that sets you apart from your competitors.
It’s not just about the price, either. If price is your only USP, you are constantly at risk of being undercut. You need something else that sets you apart from your competitors.
3. The right people are key
You can never underestimate the importance of a strong team. The right employees can drive your business forward and ensure you meet your goals.
Spend time finding and vetting employees, and don’t just leave them to it once they have been onboarded. Train them, encourage them, and monitor their performance for potential improvements.
4. Cash(flow) is king for wholesale businesses
Stock accounts for a sizeable chunk of a wholesale business’s capital, but cash flow is needed to keep paying bills, meeting customer demand, and acting on trends and opportunities.
The following steps can help to keep the cash flowing:
- Cash reserves: Wholesale businesses are exposed to many financial risks, including supply chain issues and customers that don’t pay on time. To ensure the bills get paid during tough times, keep enough cash reserves to cover at least 3 months of expenses.
- Forecasting: Predict sales volume and expenditure to estimate how much cash the business will have at any point in time during the next 12 months.
- Invoice factoring: Many invoices are not paid for between 1 and 3 months, but invoice factoring can remedy that. It involves selling outstanding invoices to a third party (known as a “factoring company”) in exchange for upfront cash.
- Invoice processing: The sooner you submit invoices, the faster they will be paid. Eliminating human error, reducing friction, and automating time-consuming tasks also help.
5. Create and nurture long-term relationships with suppliers and stakeholders
In the DTC sector, customers are a dime a dozen. Loyalty is key, but brands often focus most of their efforts on acquiring new customers and won’t lose sleep if old ones leave.
In the B2B sector, it’s a different story, and good customer relationship management is integral to success.
Reward customers for their loyalty, show them that you care, and they will return to make more and more purchases.
It’s not just your customers, either. You should also foster long-term relationships with suppliers, employees, investors, and anyone else that’s important to the continued success of your business.
6. Continually look to improve inventory efficiency
Efficiency improves workflow and that, in turn, should improve your bottom line.
Monitor orders and fulfilment rates, track shipments, update/upgrade software, train employees, and constantly seek ways to improve your business.
Don’t let your business stagnate. There are always ways to improve efficiency.
7. Add batch numbers to your product
Assigning batch numbers to your products makes it easier to track them. It’s an essential part of the wholesale inventory management process and makes those products easier to track in the event of major recalls.
This is especially important in the food and beverage industry, where expiry dates must be tracked and product recalls are fairly common.
8. Make things easy with inventory management software
Good inventory management software can simplify the process of buying, storing, organising, and selling wholesale products.
The software can manage everything related to wholesale inventory, from the initial purchase and receipt to shopping and tracking.
Check out our wholesale inventory management guide for more tips on managing wholesale inventory.
9. Consider B2B eCommerce
Many B2B businesses are rooted in archaic practices, taking orders over the phone, relying on in-person meetings, and insisting on doing things the way they have always been done.
But we’re in the midst of an eCommerce revolution right now and there’s no reason why wholesalers can’t join it.
A B2B eCommerce platform can save time and money while unlocking new opportunities. It gives your customers more ways to pay, automates orders, and allows businesses to process an array of different payment methods.
10. Stay up to date with trends to maximise opportunities
If the past few years have taught us anything, it’s that successful business must be ready to adapt to changing trends and world events.
Whether you’re changing suppliers, swapping old products for new, utilising different technologies, or pivoting as a result of unexpected events, you should always be ready to adapt.
Summary: How to manage a wholesale business
We’ve provided the insights; we’ve offered some tips—now you should have a good idea of how to manage a wholesale business. There’s still a lot of work ahead though, and there are no guarantees.
Succeeding as a wholesaler requires a lot of planning, capable employees, the right software, and a little luck. In the words of Seneca, “It is a rough road that leads to the heights of greatness.”
Succeeding as a wholesaler requires a lot of planning, capable employees, the right software, and a little luck. In the words of Seneca, “It is a rough road that leads to the heights of greatness.”
FAQs on how to manage a wholesale business
Still have a few questions on how to manage a wholesale business? Check out these FAQs.
What is a wholesale management system?
A wholesale management system is designed to organise, simplify, and streamline wholesale operations, including elements such as purchase orders, storage optimisation, and calculating optimal order quantities.
How do I manage a wholesale business during tough times?
Streamlining your business is essential. You should also keep plenty of cashflow to hand, track every expenditure, and make sure your money is being spent wisely. It’s difficult to know whether it’s best to batten down the hatches and wait for the storm to pass or just to continue as normal. We can’t help you to make that decision, but by analysing your industry, competitors, and customers, you can make it yourself.
How do I grow my wholesale business?
As with any other business, you need a multi-faceted approach. Consider your prices, products, and customer relations, as well as your team. Changes can be as simple as streamlining your software or as significant as moving into a new region or offering a new product.
What are the biggest challenges of wholesaling?
There are many challenges, and the biggest will depend on your specific industry. For many wholesalers, however, the biggest challenges revolve around efficacy, efficiency, and errors. You want more of the first two and none of the latter.