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No one can start a business without first taking the time to understand wholesalers. You could have an astounding business plan behind you and even an idea of how to go about it, and it would get you
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Product Distribution Strategy
September 6, 2019
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What Are the Types of Wholesalers?

No one can start a business without first taking the time to understand wholesalers. You could have an astounding business plan behind you and even an idea of how to go about it, and it would get you nowhere if you didn’t first tackle the wholesale world. In layman’s terms, wholesale is really the first port of your distribution chain. This is where you will buy the stock that stands to take your company further. The question is, what are the types of wholesalers, and how can they help you?

We’re going to show you the five major types of wholesalers. Top contenders include:

  • Merchandise wholesalers are most common, and buy stock to sell directly to clients. 
  • A full-service wholesaler will provide a full service, including stocking inventories and even assisting customers or operating warehouses.
  • Limited-service wholesalers, including cash and carry, provide limited lines of fast-moving merchandise to small businesses. 
  • Brokers and agents operate in areas like real estate, and commune between companies and consumers.
  • Specialist line wholesalers operate in a specific field, such as used cars. Rather than offering various products, they provide this speciality alone.

While wholesale may seem like a simple concept, it’s actually an in-depth topic to get your head around. There are multiple wholesale channels to consider in the FMCG industry alone, and the time you take thinking about each will dictate success. If you’re a small business owner looking to understand your wholesale options, then, keep on reading to find out.

What is a Wholesaler?What is a Wholesaler

If you’re totally new to the business world, your first question is obviously ‘what is a wholesaler?’ Most of us have some rough ideas here, but there’s no place for rough concepts in business. By dictionary definition, a wholesaler is ‘a person or company that sells goods in large quantities at low prices, typically to retailers.’ So, what does that mean for your company? Effectively, you need to start with wholesalers when it comes to buying and selling your goods. 

From specialty wholesalers to those who sell general merchandise, this is where you will purchase large quantities of either your products or the things you need to make them. As such, your relationships and decisions here will directly impact the products you bring to your customers later on.

Instead of rushing into the wholesale process, it’s vital to consider the types of wholesalers offered and the product lines they provide. Rest assured; every kind of wholesaler will provide a very different experience. Get this wrong, and your product supply could soon run into issues. Take your time over your decision and you can develop wholesaler and retailer relationships that last the life of your whole business or at least suffice enough to get your efforts off the ground. Make sure, too, that this is one of the first business processes you take care of to start working towards success.

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What are the Types of Wholesalers?What are the Types of Wholesalers

There are different types of wholesalers, but what exactly are they? Understanding this is vital before you can begin your wholesale journey, so you’d be right to ask. In reality, there are far more types of wholesalers than you might imagine, and this can be daunting when you begin to look for business supplies. Luckily, things aren’t as confusing as they might seem.

Ultimately, your decision towards a specific wholesaler will depend on many factors. Sometimes, it’ll be about little more than how much you prioritize distribution channels. In other cases, the size of your company may dictate your need for multiple wholesalers for many types of products. Even your territory can have an impact, with distribution in the U.S. varying a great deal from, say, China.

These aren’t the only wholesaler branches, but they are the ones you need to know about when it comes to getting business off the ground. From retail wholesales to real estate, your decision here could either make or break your efforts. Getting this right also stands to make your life a whole lot easier moving forward. 

Functions of Wholesalers

We’ve covered what wholesalers are and the types of wholesalers on the market, but we still haven’t broken down precisely what functions a wholesaler has. As such, you may be unsure whether you even want to embark on this option. In reality, the functions of a wholesaler are as varied as the types of wholesaler on the market. Depending on your wholesale selection, you can expect to enjoy one or more of the following functions for your business:

Assembling

A wholesaler will assemble goods from various places, sometimes even overseas and certainly from numerous manufacturers, ensuring you the best possible deals.

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Storage

Most wholesalers, especially cash and carry, will purchase goods in advance of demand and then store them in a warehouse or other facility. This ensures the stock is always there when you come to buy.

Packing

A wholesaler will also pack items during storage, either in product packaging or storage-safe methods. This saves retailers time waiting on goods and preparing them once they arrive. 

Transportation

Wholesalers will often take care of the transportation so that you don’t have to worry. Many provide their own trucks to carry goods from warehouse to retailer. Others will work with couriers to get stock to you in a timely manner. 

Financing

The majority of wholesalers, especially merchandise wholesalers, will buy stock upfront. Some will then sell supplies to retailers using credit, providing a line of finance for both merchandisers and retailers in turn. 

Risk-bearing

In part because of their responsibility through the shipping process, a wholesaler also bears the risk of the products in question. As such, products damaged in storage or transport won’t cost the retailer anything, ensuring a satisfactory user experience. 

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Examples of Wholesalers and Retailers

As is the case with anything, you may be at a loss as to how this kind of operation would work within a business setting. Even if the idea of wholesale sounds good on paper, you still can’t be sure of the applications or services it can bring to the working world. That’s where real-world examples come in. These allow you to see wholesale applications in business at the moment and thus paint a much clearer picture.

Some modern-day examples to consider include:

  1. Online business to business (B2B) wholesalers work with e-commerce sites to either supply large quantities of stock or sell straight to consumers.
  2. Cash and carry wholesalers supply quick stock to retail stores with a fast turnover and an impulsive customer base.
  3. Specialized wholesalers working within plumbing supplies can supply stock to both self-employed plumbing professionals and plumbing-specific physical stores. They can also provide expert knowledge on each of the products they provide.
  4. Brokers or agents can work within real estate to connect consumers and companies, and also oversee various aspects of the process.
  5. Full-service wholesalers can similarly work within a sales office or other non-customer facing industry to take care of everything from sales to storage and any market feedback.

As well as revealing the full value of wholesalers, each of these examples proves just how different their services can be. While some wholesalers, such as cash and carry, provide a more stereotypical retailer experience, alternatives such as full-service are entirely different. Each comes with a different price point and offers a very different user experience all around. 

What is Wholesale Structure?

When we consider business, most of us think about the primary and two-toned structure of the company and consumer. These are, after all, the two most pivotal points in the sales process, and often the only ones which need consideration. The moment you bring a wholesaler into your business, though, you change that structure far more than you might anticipate from the outset. In fact, your sales become much more structure-based than they would ever be if you manufactured and sourced everything yourself. This isn’t a bad thing, but it is worth noting.

In a basic sense, the wholesale structure, especially concerning merchandise or limited service wholesalers, goes: Manufacturer - wholesaler - retailer/company - the client. That doesn’t seem too hard to get your head around, right? Until, of course, you consider an alternative wholesaler like a broker, which structure can look more like: wholesaler - client - wholesaler - company. Full-service wholesalers, too, bring a much less straightforward and easy to follow structure as they maintain something of a juggling act for the companies they work in correlation with. Even specialty wholesalers can disrupt this flow, as they return to manufacturers after speaking with retailers who then deliberate with their customers. Rather than the simplistic structure you might expect from this relationship, then, you could quickly end up with something of a tangled and confused operation.

In reality, there’s nothing to fear from these structures. When approached right, they can add both support and ease to your business processes. It is, however, vital that you consider the variations available within even the wholesalers we’ve discussed here. That way, you can arrange for and account for complex structures you might not expect when you enter into an agreement. Arranging for changing business structures is the best way to manage them.

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How Do I Buy Wholesale?How Do I Buy Wholesale

If you like what you’ve heard so far, you may be wondering how you go about buying wholesale. You wouldn’t be alone. This is one of those business tips that even the majority of small business guides fail to cover. Sadly, though, this is crucial information for success moving forward. All the wholesale benefits in the world are never going to be yours if you don’t take care of this, after all. Luckily, wholesale isn’t that complicated.

To prove that, we’re going to look at four essential tips to get you started on your journey here:

  • Choose the wholesaler you need. We’ve given you the information, but it’s down to you to choose which wholesaler would benefit your product lines.
  • Know your price points. As with any purchase, setting limits is vital for avoiding paying over the odds.
  • Think about shipping. Speedy wholesalers who ship on the same day are ideal. You certainly don’t want wholesalers who leave you waiting.
  • Along the same vein, consider reliability. Check out customer reviews and make sure that you can trust your chosen wholesaler.

Your company is the customer in this process, so make sure to act like one. Don’t agree to anything which doesn’t sound like a good deal, and don’t be afraid to shop around. Wholesalers aren’t hard to find online now, so do your research and find the ideal business match.

Retail and Marketing Channels for Wholesalers

As you might imagine, getting the word out isn’t as easy for wholesalers as it is within other industries. Blanket advertising would see wholesalers struggling to reach desired audiences and ultimately failing to pull profits. But the massive wholesale market proves that not to be the case, and various wholesale-based retail and marketing channels are to thank for it. Much like traditional companies, wholesalers have developed a variety of methods to get their name and their goods out into the business mainstream. Retail is perhaps the most obvious option here as it allows merchandise or cash and carry wholesalers to sell stock directly to companies who then sell it to customers. This wholesale to retail relationship is a tried and tested one, and it works pretty well, making it something of a wholesale go-to. Many wholesalers even contact retailers directly to begin such relationships.

Of course, retail isn’t the only wholesale channel, as we’ve already seen. Successful wholesalers such as L.L. Bean are also continuing to make use of tried and tested mail catalogs. By searching for company details online, wholesalers are able to send relevant directories straight to their door and facilitate orders that way. Along a similar vein, many wholesalers also rely on telecommunications to drum up business, though this method does require a much larger upfront workforce for success. Both can still lead to endless orders which a wholesaler needs to keep themselves afloat and appealing to a broad audience. And, of course, online operations such as a website and social media accounts are as vital here as they are within any modern industry of note.

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What is Wholesale Ecommerce?What is Wholesale Ecommerce

That leads us nicely onto this next point, which is to consider what precisely wholesale e-commerce capabilities consist of. Online operations have changed the face of every industry in recent years, and e-commerce is no different. In fact, many wholesalers find that B2B buyers now prefer to buy online just like any other consumer. In a basic sense, then, the chances are that you already understand wholesale e-commerce to be simply the process or purchasing or repurchasing wholesale goods online or using internet-connected software and systems. But, of course, wholesale e-commerce also goes much deeper.

To keep up with competitors, most wholesalers now also offer in-depth systems which allow consumers to repurchase or add items to repeat orders at the click of a button. No longer does a retailer need to fill in detailed reports or catalogs each time they purchase. Instead, they can enter their search history or account number for faster transactions. This means that even a last-minute order is now straightforward to process. And, of course, online emails, catalogs, and newsletters also guarantee that wholesalers are now able to spread messages worldwide.

Speaking of worldwide, the ability to trade via ecommerce has also led to company-wholesaler relationships, which would never have been possible as little as 10 years ago. Companies are now able to stock wholesale supplies from distribution channels in any country imaginable. Even small business owners are now freely buying and selling stock from merchandise wholesalers based in India and other such exotic locations, all for very little cost to the company themselves. That makes for unique stock indeed, and none of it would be possible without this seemingly innocuous wholesale e-commerce freeing up so many new types of products.

Consulting with R+L Global Logistics

Of course, this expanded wholesale reach is not much use without also thinking about the logistics behind global capabilities like these, which is where we at R+L Logistics come in. Whether you’re a wholesaler looking to expand your reach or a business owner seeking out wholesale distribution channels from afar, we could provide the solutions you need. We pride ourselves in taking every aspect of logistical matters like these into account to ensure that even long-distance collaborations needn’t be at all complicated for our customers. 

When you consult with our team, we’ll develop transportation solutions to help you ship or supply even large quantities of overseas wholesale products. Even better, you won’t need to lift a finger to make sure that your product lines arrive where they should when they should. We simply need you to tell us the why, how, and what or your wholesale needs, and we promise to take care of the rest.

Ready to take the next step? Contact us today to learn more about direct distribution, wholesalers and more.

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