The line between wholesale and distribution can be confusing and oftentimes blurred. In this post, we’ll break down the differences between the two and how your business can leverage wholesale to lower costs and increase profits.
What is Wholesale Distribution?
Wholesale businesses work by selling merchandise at a wholesale price to retailers, boutiques, or other types of businesses. Similarly, wholesale distribution works by buying in bulk and reselling to retailers who then sell to consumers. Distributors also handle the logistics and warehousing of manufacturer merchandise. You can think of “distribution” being the middleman between manufactures and businesses that sell directly to consumers.
Finding a Wholesale Partner
Contact the manufacturer directly
Reaching out to a manufacturer of interest directly can remove the costs associated with the distributor as a middleman. If your business is too small for their minimum order, ask about their established wholesale distribution channels. Wholesale distributors 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 purchase, the larger your profit margins will be.
When you reach out, make sure to ask any questions about where materials are sourced, and about their ethical and sustainable background. Consumers are more involved in their purchases, so look to wholesale partners to give 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 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, your wholesale relationships should change over time, so don’t be afraid to shop around and research alternative supplier options.
The digital era is seeing boom in the ways we connect with one another. Innovations in digital trade shows and marketplaces are giving us all a technologically advanced way to stay connected and do business. But before getting into platforms like digital trade shows and marketplaces, start with a specific online search built around keywords from the category or vertical you’re attempting to target. With this, you can get a better idea of what's out there and narrow down your options.
Digital Trade Shows
Trade shows are one of the most important methods of finding and building a wholesale 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 partner even further. 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 partnerships. In addition, brands and wholesalers 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
Research, research, research. Wholesale distribution can be profitable, it also requires more 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 involves a larger buy, you will also need a larger space to store your merchandise. Some states will require a wholesale licenses, and specific goods may require additional licenses on a federal level.
If you’re looking tap into more markets and increase sales, an online marketplace can be just as useful for you wholesale distribution business. NuORDER Marketplace can be used to connect with potential retail buyers, and spread awareness about your merchandise to a wider audience.
Wholesale remains a profitable channel for both brands and retailers to invest in, if done correctly. On both sides, there is a greater need for technology to assist in the buying process, and both wholesalers and buyers are looking for standardization within the industry. You can the find the latest industry insights on the future of wholesale at WWD, where our latest survey of 688 brands answers questions on establishing retailer relationship, investment in the channel, and common pain points.