When you think of a new idea, the first thing that might come as a challenge could be the money involved. Big investments and capital needed to start a business can be off-putting for people and this may ultimately lead them to not pursue the idea. But, what if there was a way to start a business and not need a lot of capital to get started? Here, we explore the idea of a wholesale business and how it can help you reach your goals.
What is a Wholesale Business and What Does it Entail?
A wholesale business is a business model where a business directly buys goods from manufacturers in bulk and sells them to retailers. This model has been around since the industrial revolution and is still an effective way for businesses and individuals to make profits. Before we discuss the benefits of this model, let’s take a look at the types involved.
1. Traditional – Merchant Wholesaling
This is the above-mentioned model where businesses directly buy from manufacturers and sell them to other retailers.
2. Manufacturing to Retail
In this model, the business manufactures its products and sells them to retainers.
Fortunately, any business you choose has the same number of benefits. We’ll take a closer look at some of them so you can see how great starting a wholesale business can be.
a) Preserve Money
Usually, when you buy products from a retailer, the high prices are due to the costs of shipping and trading with multiple hands. When you’re a wholesaler, you save up on a lot of money because you get high discounts when you purchase in bulk. This low price that you buy from can be sold higher to the retailer, giving you an easy profit. When the margin difference between the buying price and the selling price is higher for you, you can take the lead by gaining a higher profit quickly.
b) Build Good Relationships
Every business has its heart with relationships. Trust and loyalty are aspects of every successful business and the same applies to a wholesale business too. In this business, you get to build a wide network with suppliers and manufacturers. Good relationships with them give you the ticket to good business.
3. Gain Thorough Expertise
When you sell products for a very long time, you gain expertise through the process. Dealing with your network gives you the advantage of knowing what’s in demand and what isn’t. Supplied with a lot of useful tips, this can give you the edge over your competition too. As you build on this knowledge, you can predict market trends, and focus on making your business even stronger.
Tips on Choosing the Right Products and Suppliers
1. Know Your Product
Before you even consider choosing your supplier, it is fundamental to know what products you want to sell. This is important as not all the suppliers will have the products you sell. Furthermore, as there are so many wholesale suppliers in India, making the right decision can be hard. To know what to sell, you have to research several aspects such as:
The location you choose to sell in may have certain products in higher demand or supply. This will accordingly tell you how much profit you can make in a given location.
The buying price of your product shouldn’t be too expensive and neither should be too cheap.
You should ensure that the products you buy give you a good margin.
Choosing a market that has high demand can give you continuous business. For product sourcing, this can mean a higher advantage as you would constantly have an influx of goods meaning your sales will be good.
2. Research Your Supplier
Your supplier is one of the single-most important parameters of your business. Ensuring that you choose the right one can make your business flourish. As not all suppliers may be using the Internet, getting to know whom to choose can make it challenging. However, with a little bit of patience and time, you can choose the best one for your business.
a) Word of Mouth
Get a sense of how reliable your supplier is. What do other wholesalers tell about them and how are they viewed as a whole?
b) Local associations
Meet potential suppliers in your local towns. Speak to them and find out what they do. Gathering at such communities can give you a better idea of the breadth of the products that these suppliers sell.
Tips On Building an Effective Online Presence
Most of the world is online today and you can get noticed if you have a presence too. But, how do you get users to continuously come to your website and check out your offerings? Let’s find out.
1. Get Active on Social Media
As paid advertisements can be expensive for new businesses, getting organic leads through social media might be possible. Create content that resonates with your audience, and share helpful posts for them to check out your services. Be consistent and watch your online presence grow slowly.
2. Connect With Your Customers
Getting in touch with your existing customers can give you an easy push to be noticed. Asking them to share their experience, getting testimonials, and keeping them engaged acts as a win-win for both sides.
With these online marketing tips, you have yet another advantage on your sleeve to get your business started. As social media trends keep changing, it’s always a best practice to be on point with the latest content styles.
Develop a Strategic Pricing Strategy
When you get started with your business, it is vital to choose a strategy that works for you. While several different types exist, we’ll cover a few:
1. Price Bundling
Here, you mix two products and sell them to your clients. The bundling can bring the price down, making it an attractive choice for clients.
2. Location-based Pricing
When product sourcing to hard-to-reach areas is challenging, you can set a high price to sell. Depending on your location, these prices can vary and you can choose based on your niche.
3. Discount Pricing
Selling products at a much lower rate during the off-season or if a product doesn’t sell well is discount pricing. This is a great way to ensure you’re in business while trying to make profits.
Creating an Effective Logistics Plan
Finally, the last step is to get your products delivered to your clients. But, how do you ensure that it reaches them on time, has the right products, and is in good shape? There are two ways that you can get them to the final place and we’ll explore both briefly.
1. Traditional Logistics
Here, a business directly takes care of the end-to-end logistics from product sourcing to inventory and transport.
A recent phenomenon, dropshipping refers to a concept where you don’t own any inventory. When you “dropship”, a company you work with takes care of all the inventory and logistics needs.
To ensure you’re choosing the right logistics strategy, check whether your products work well in the traditional model or with the dropshipping model. Weighing the pros and cons can be time-consuming, but with an effective logistics plan, your business can go from a local model to a pan-India model.
Launching Your Wholesale Business
Now that you’re equipped with all the info to be a wholesaler, you may only need capital to get started. Whether it is a small business loan or attractive interest rates, Tata Capital has a wide selection of products for you to choose from. Pick the best option for you and grow your business with us!