There are two main components to a wholesaling business: finding the right product at the right price and finding retailers to resell the product. As you start your wholesale business, consider the following mistakes that new wholesalers often make so you can avoid making them yourself.
1. Ignorance of Your Product
In the business of wholesaling, you are both the buyer and the seller. As a salesperson, you cannot be successful unless you thoroughly know your product. Once you choose a product, find out how it is used, where it is made, how long it will last and how well it is made, as well as the profile of the end target market consumer for the product. How well you know your product translates into how well you sell your product.
2. Failure to Research Your Target Market
The product or products you decide to sell via your wholesale business will help you begin to define your target market. However, don't stop at defining your target market. Understand that in the wholesaling business your target market is a combination of the retailers you sell to directly and their customer base. Understanding the demographics of both your wholesale customers, and the individuals who ultimately purchase the products, will make all of your sales efforts more effectively targeted. Furthermore, while cold calling to find retailers who want to sell your product is commendable, it is advisable to do your research first to find companies who are likely to want what you have to sell.
3. Branching Out Too Far
With an array of cheap or inexpensive products to choose from, you may have trouble deciding just which products to offer. Keep in mind that if your wholesale business focuses on too many unique products, it may be difficult to successfully sell any of them. A good rule of thumb is to wholesale only the number of different products that you can thoroughly research, and get to know both the product itself and the product's target consumer. Another consideration about carrying too many products is that you will have to provide a storage facility for all of them, so consider your available space before you expand your product offerings too far.
4. Paying Too Much for Shipping
Many beginning wholesalers want to take advantage of cheap products from overseas or on the opposite side of the country. Don't forget to calculate what you will spend on shipping and add that to your balance sheet. The low, low prices for faraway products may get much higher once you consider the rising cost of having items shipped to you. Research and consider local suppliers and manufacturers first. Not only will you be supporting your local economy, but you will also save money on your bottom line.
A wholesale business is an active way to participate in a free market economy. As a wholesaler, you bring the products being manufactured to the retailers who want to sell them. Wholesaling is a high energy business that takes savvy business skills to succeed.