B2B Wholesale: Definition, Benefits, Risks
Item sale is as important as its production at a high level, and wholesalers are those who can help you with selling. But before starting communicating with them, it’s vital to learn inside out what is wholesale in B2B ecommerce.
So in this article, we’ll dive into the wholesale field and make out why a B2B business will benefit from a wholesale package and why in some cases, it’s better than retail. Moreover, we’ll get through wholesale risks as forewarned is forearmed.
Wholesale in B2B ecommerce is shipping supplies in bulk to other companies. Companies purchasing products in bulk either use them for consumption internally or sell them to their customers.
After purchasing items from manufacturers, wholesalers move them to retailers who sell items to the end-user for a profit. It can be another story: wholesalers can sell their items for the end-user without an intermediary and come as a middleman themselves, but in this case, it’s B2C business, not B2B.
Note that a wholesaler sells goods at a higher price than they were purchased from a manufacturer. As a rule, purchasing items in bulk happens online, which makes the process run quicker.
Wholesale is a type of B2B ecommerce. So let’s take a sneak peek at its types to find out which place is taken by the wholesale model.
They produce goods by using raw materials and special technology which is usually kept secret. Finished goods are sold to other manufacturers or wholesalers.
Usually, distributors work with manufacturers. To help finished manufacturers’ goods to be sold is the main distributor’s task.
Retail sale of goods is common in B2C business. You’ve seen department stores with items you can purchase. Although this model is popular in B2C business, B2B companies often turn to it too. Retail sale is the opposite of the wholesale model.
As you see, types of B2B ecommerce are elements in the link of the way from producer to the end-user.
There are several types of wholesalers playing on the market. We’ll list the ones you can meet most often.
Merchant wholesalers are the most common type of wholesaler in B2B ecommerce. They buy items in bulk from manufacturers and sell them to retailers. If there is any problem during shipping to a customer or products are damaged, merchant wholesalers themselves pay penalties. Sometimes merchant wholesalers are called packaging distributors.
Brokers don’t assume any risk. They just have a manufacturer on one side and a customer on the other side. As you’ve guessed, brokers’ have excellent negotiation skills as they have to get the deal done giving the commission for the deal.
Manufacturers’ Sales Branches
This type of wholesaler doesn’t act as an independent player as it’s a branch of the manufacturer but physically separated from it. When a manufacturer is in New York, their branch can be in Indianapolis. Such branches’ task is to sell the product.
How Sales Are Processed
Wholesale is one of the fields where digitalization is a common thing. Sales are processed by using electronic data interchange (EDI). Thanks to EDI, some processes don’t require human intervention, and deals are managed digitally.
— Wholesale Benefits
Here are five advantages of this B2B ecommerce model. Read about them to understand while this model is profitable.
Your Growth Speeds Up
If you want to grow big quickly, packaging wholesalers are the guys you have to turn to first. By selling items in bulk, you kill two birds with one stone:
- Raise your volume.
- Decrease cost-per-unit.
Moreover, you’ll deliver goods to a few customers for the first time, which will help you reduce shipping costs.
You Get Valuable Data
Your website will be a treasure when using a wholesale model as you’ll pick out data and insights about your customers’ preferences and patterns. How much time are they exploring your goods? Why do they choose your rivals or buy from you? Which number of items in one pack is more suitable for them? These and other questions become understandable when interacting with a wholesale shipping supplies distributor.
Customer data is vital in the post-Covid era when people in both B2C and B2B ecommerce are used to buying online.
You Build a Network of Suppliers
When running a business, you have to communicate with suppliers and distributors. For example, if you want to wholesale mailing bags, you’ll ask yourself, “What are the best wholesale packaging supplies near me?”
So your task is to contact suppliers and ask them whether you can sell them your products or not. As a result, you’ll build a network of reliable and unreliable distributors. Of course, it’s better to check any supplier on Google to avoid mistakes and waste of time and money.
Increase Brand Awareness
Wholesale ecommerce in B2B will help you boost your brand. As you’ll sell your products in large quantities, you’ll grow fast. As a result, other suppliers will notice you and start exploring your brand that can turn potential customers into real ones. This can lead to building a network of suppliers you can choose from. As time goes by, you can charge a premium for your items.
So keep in mind that wholesale B2B ecommerce is a wide field with million possibilities.
No Unsold Items in Stock
It’s all because you sell your items to distributors in large quantities. 100, 200, 500 items in one pack will prevent the occurrence of extra items collecting dust near other products.
One of the biggest reasons why you’ll profit from whole sale packaging is the absence of unsold items in stock. You won’t see the stock cluttered with items you don’t know where to place. No products which can’t wait for its buyer.
— Wholesale Risks
Each deal has its dark side. So when thinking about why you can profit when wholesaling, keep in mind why you can fail too. Here are five risks you have to consider.
Some items require cold storage in fridges or other cooling equipment. Unfortunately, it can break down at any moment, and you can’t predict this occasion. So it’s important to control the condition of your equipment to prevent item damage.
With thousands of items in stock, you have to keep them in a large property that can be damaged by fire or another natural disease that can destroy your items. Therefore, it’s vital to create an emergency preparation plan.
Any business with physical inventory can experience theft if it doesn’t have any protection. So ensure that your items are protected from stealing when stored. Moreover, ensure that you have a security measure for keeping your products safe when transporting.
You can enter into a contract and even make a few successful deals with a shipping supplies company, but your money can be stolen in one moment when you aren’t expecting it. It’s all because of an unreliable supplier that can play on the market. Therefore, spend your time looking for a credible distributor with experience and exploring their website, and checking manufacturers they partner with.
A defect is an occasion which factories face every day. It’s important to throw damaged items away to prevent their shipping to customers. Otherwise, both you and a supplier will ruin your reputation.
Retailers won’t buy from a wholesaler anymore, and you’ll be left without wholesalers as any distributor doesn’t want to risk.
So attentiveness is an essential part when shipping items to a wholesaler.
— Why Wholesale Might Be Better for You
Retail is the wholesale counterpart, but either model can be profitable for you. It all depends on your business. So let’s figure out when wholesale is the best bet for you.
If You’re a Newcomer
Rookies in the market have to grow fast as there are plenty of competitors ready to kill them. So growing big in a short time is the only way to stay afloat.
When selling items in large quantities to one supplier, you’ll become noticeable to other ones.
If Talking With People Is Hard for You
Choosing the retail model means constant communication with retailers. You have to look for a big number of companies to sell your product. What does it mean? Talking, talking, talking. Retailing requires selling a small number of products for plenty of retailers. But when you’re looking for a wholesaler, the story runs in another way as you have a few customers but sell items in bulk.
Therefore, wholesale is ideal for people who have a hard time when communicating with people and solving marketing problems.
If You Need Financing
Some wholesalers finance manufacturers, so they get advance money and can use them for purchasing materials for producing items or for another goal. Yes, it’s similar to a credit.
Wholesale ecommerce in B2B is a profitable deal when knowing its benefits and considering risks. To make money from it, it’s important to find reliable wholesale packaging companies to partner with. We’re glad to help you with wholesaling, so don’t hesitate to contact us!
Complete your sales and increase your profit with our wholesale offers.