What Is Wholesale Distribution And How Do I Know I'm Ready For It? - Lioness Magazine
Sales Scale

What Is Wholesale Distribution And How Do I Know I’m Ready For It?

Are you a solopreneur who has a tangible product to sell, one that you feel is ready to get into the hands of many more customers? You have an efficient and reliable means of production worked out: you may manufacture in-house and have a great team working for you, or you have a reliable wholesale source who sells to you at a competitive price. You fulfill requests for product on time and seldom back order.

The product is sold on your company website and is also available in a network of local stores. Sales are brisk and there are lots of re-orders. Yet, you now realize that absent wider distribution, you are actually losing money. You conclude that it is time to look for a third sales channel, a wholesale distributor.

Congratulations! Selling your product through a wholesale distributor is a big step, a validation of your business acumen. Be a real pro and take a minute to understand what factors may persuade a wholesale distributor to include your product in their mix.

What Is Wholesale Distribution?

A distributor is a middleman who makes money from products he sells to a wide range of retail outlets, so he will take on only those products that he expects to sell quickly. Show that you are a good risk by demonstrating healthy product sales both from your website and at retail outlets.

Be prepared to sell your product to the distributor for less money than you sell to retailers. The distributor needs to see a certain profit margin before s/he takes you on. Moreover, the distributor must buy inventory and so must invest in significantly more product than a typical retail establishment.

What Are The Benefits of Wholesale?

The advantage for you is that your product will be much more widely available. Another advantage for you is that many more retailers will stock your product when it is available through a wholesale distributor, because many retailers prefer to purchase a wide array of merchandise through a limited number of vendors. It is too time-consuming to deal directly with many small vendors, interacting with numerous salespeople and invoicing each separately. One-stop shopping is more efficient.

Distributors also prefer business owners who have multiple products, because it is favorable to their administrative costs. It is easier to sell several products from one company, so the more products you have available for sale, the more attractive you are to a wholesale distributor.

When your sales are strong and the time you spend selling individually to retail outlets becomes unwieldy, it is time to contact wholesale distributors to learn if you are considered a good prospect for them. Ask the retail establishments to whom you sell who you should contact and ask for a reference.

Thanks for reading,

Kim

About the author

Kim L. Clark

Kim L. Clark is an external consultant who provides strategy and marketing solutions to for-profit and not-for-profit organizations. Kim is the founder and principal of Polished Professionals Boston and she teaches business plan writing to aspiring entrepreneurs.

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