Wholesaling is selling items to retailers at discounted prices. For some manufacturers, this is the most practical way of earning profit instead of running an e-commerce store or setting up a brick and mortar shop.
Reverselogix.com shares some basic steps to start your wholesale business.
Ensure that Wholesale Pricing Covers All your Costs
These costs include all the materials required for manufacturing, the labor, and employee salary and benefits. More importantly, make sure you set a price that would give you enough profit.
Enforce an SRP
When selling to retailers, enforce an SRP or suggested retail price, which is the price at which they should sell your products, no more, no less. This becomes more crucial if you’re also selling your products to direct customers because you wouldn’t want to take sales away from your retailers and vice versa. This would ensure that your products are always sold at the same prices.
Set Clear and Realistic Payment Policies
If you’re just starting out, consider a “get paid upon ordering” policy, “deposit amount” policy, or if you can afford it, net payment terms such within 30 to 60 days to extend credit. However, be sure to check your retailers’ backgrounds, mainly a credit check, prior to fulfilling their orders. When you’re done setting up your payment terms, include them on your invoice template to help your retailers know exactly how to handle payments.
Have a Return Policy
While you could choose to make all purchases final, retailers would prefer that you offer exchanges or returns. Just make sure you set clear return and refund policies. Consider using returns management software, so you could better track returns and exchanges, as well as pinpoint which items are usually returned and why.
Marketing is Key
The most effective way to create buzz around your business is through marketing. Build a website for your products, create social media accounts, and join conventions to showcase your knowledge, experience, and skills.
Selling products on a wholesale basis is an excellent way to get them into stores and in front of many customers. It likewise takes a significant burden off your shoulders because you don’t have to do everything yourself. Keep these basic steps in mind to ensure success.