4 Ways Wholesaling Differs From Retailing
Wholesalers have a special mission in the pantheon of consumer goods movement. The business model is different than that of retailing. If you’re going to be a successful wholesaler, you need to understand how wholesaling is different from retailing and how you can overcome its special challenges. Here are four ways wholesalers and retailers differ, and how to make the most of the wholesaling model.
- Customers buy in bulk at huge discounts – In retail, it’s common to sell one item to a customer. Rarely do customers buy in huge volumes expecting a discount. With wholesale, however, it’s routine to have customers buy huge volumes of a product and expect a discount off the marked price. As a wholesaler, you need a way to manage that process, both the merchandising and the pricing, because it is run-of-the-mill, not the exception.
- The model is often business-to-business – Retailers cater to the end customer. Wholesalers often cater to other businesses. In fact, many wholesalers sell to the retailers who then move product to the end customer. Some wholesalers sell to other wholesalers. Either way, your customers are often long-term business customers with special needs. You need an effective way to manage that relationship.
- Wholesaling offers a more flexible business model – Wholesaling come in a variety of business models. Merchant wholesalers, also called distributors, buy products in bulk and resell them to retailers, wholesalers, or other businesses. Brokers often buy and sell products in bulk without taking control over those products themselves. Manufacturers of goods often set up their own wholesale branches to sell directly to the public or to go around the distributor. The right operations solution will help you manage any of these business models.
- Discount rules are usually more robust – Retail discount rules are often centered around promotions or sales events. Wholesale discount rules are typically based on volumes. For that reason, the discounts are more robust, and can often be quite diverse based on the total quantity of a product being purchased at one time. On top of that, seasonal discounts may apply if a manufacturer is promoting a particular product at a certain time–at Christmas, for instance. Wholesalers need more robust discount and price rules management.
If your wholesale business is due for an operational makeover, consider ChainDrive for your next solution.