In the fast-paced world of retail and distribution, the key to success is understanding, and effectively utilizing, wholesale distribution. Wholesale distribution partners can lower costs and increase profitability for retailers, and the need for increasing access to products means that starting a wholesale distribution business can be very profitable. In this post, learn about the relationships between retailers and wholesale distribution, as well as the tools and technology that fuel wholesale distribution in today’s environment.
What is Wholesale Distribution?
Wholesale businesses manufacture and sell their products directly to retailers, boutiques, or other types of businesses at wholesale prices. These businesses then sell the product to consumers. Wholesale distributors, on the other hand, purchase and store products in bulk from the manufacturers, and then sell the product to retailers like boutiques or small businesses. Wholesale distributors also handle the logistics and warehousing of manufacturer merchandise, reducing the complexity that retailers sometimes face when working directly with a manufacturer. You can think of “wholesale distribution” as the middleman between manufacturers and the businesses that sell directly to consumers.
How Does Wholesale Distribution Work?
Finding a Wholesale Distribution Partner
Use a Distribution Partner To Avoid Minimum Order Requirements
Reaching out to a manufacturer of interest directly can remove the costs associated with using a wholesale distributor as a middleman. However, many manufacturers have a minimum order requirement. If your business is too small for their minimum order, ask about their established wholesale distribution channels. The manufacturer likely has existing relationships with wholesale distribution partners, who may be able to sell your business a smaller minimum order at a higher price per item. Keep in mind, the fewer people involved in your wholesale distribution purchase, the larger your profit margins will be.
How to Find the Right Wholesale Distribution Partner
Once you’ve found a wholesale distribution channel for your desired product, there are several things to consider before moving forward with the relationship. Make sure to ask where materials are sourced and about their ethical and sustainable background. End consumers value these elements today more than ever, so look for wholesale distribution partners with sustainable initiatives that can offer you an extra layer of credibility in the eyes of consumers.
Here’s a checklist of some information you should ask for at your first wholesale distribution meeting:
- Minimum order requirements
- Wholesale unit prices
- Location they serve/ship to
- In-depth product information
Be honest and upfront about what you’re looking for and ask for any additional information you might need to complete your purchase. Remember, there may be multiple wholesale distribution channels for one product, so don’t be afraid to shop around and research alternative supplier options. Also remember your wholesale distribution relationships will and should change over time, so be open-minded to how wholesale distribution partners can help support you as your business grows.
Digital Tools for Wholesale Distribution
There are a variety of digital tools and innovations that can help you find wholesale distributors or even start and manage your own wholesale distribution business. Tools like digital trade shows and online marketplaces can help connect retailers and distributors, share new products, and simplify ordering processes.
Digital Trade Shows
Trade shows are one of the most important methods of finding and building a wholesale distribution partnership that grows your business. These face-to-face shows are great when we can be in the same room together, but present health concerns don’t make gatherings of such a size easy to pull off. Now, digital trade shows can give you the closest available thing to an in-person event, but add the technical advantages of being able to sort merchandise by category from the comfort of your computer. Digital trade shows can help narrow down the search for a perfect wholesale distribution partner. Similarly to doing a keyword search, be sure to research which digital trade event fits the vertical most relevant to your business.
Outside of scheduled digital trade shows, an online marketplace can give you year-round access to an even larger pool of potential wholesale distribution partnerships. In addition, brands and wholesaler distributors can reach out to you if they think they have merchandise that fits your retail style. This allows for a two-sided interaction that both parties are interested in.
If you’re looking for a diverse and sizable digital marketplace, retail buyers can sign up to explore over 2,500 brands on NuORDER Marketplace for free. Simply fill out an application here to get started.
Read more on what digital solutions mean for the future of wholesale.
Starting a Wholesale Distribution Business
If you’re looking to start your own wholesale distribution business, the first place to start is research, research, research. Wholesale distribution can be profitable, but it also requires investment, space, and risk. You will be buying in bulk directly from manufacturers and need to make sure whatever merchandise you purchase, the consumer demand will be high enough to generate an equally high number of sales. Since wholesale distribution involves a larger buy, you will also need a large space to store your merchandise. Some states will require wholesale licenses, and specific goods may require additional licenses on a federal level.
If you’re looking to tap into more markets and increase sales, consider using an online marketplace like NuORDER to connect with retail buyers and spread awareness about your merchandise.
Wholesale distribution remains a profitable channel for both brands and retailers to invest in if done correctly. On both sides, innovation in technology and tools are changing the processes.
Embracing digital tools, like NuORDER’s online marketplaces and digital trade shows, can simplify the search for wholesale distribution partners and accelerate business opportunities. Whether you're a retailer or a distributor, unlock new possibilities for your business with NuORDER by requesting a demo today.