Growing a wholesaling business is both challenging and rewarding despite high competition. The world recently experienced a massive socio-economic setback in the form of the Covid-19 pandemic and the wholesale industry has since begun to show a strong recovery. It is clear that you need to be precise about both planning and operations if you want to be successful in the emerging landscape.
Like other sectors, wholesalers have to navigate through many push and pull factors in order to keep their business thriving. Right from managing inventory to coordinating with suppliers, everything needs to be foolproof for sales success and a healthy bottom line.
We have curated a list of 12 steps that will help you secure success in wholesale business management. It is aimed at providing actionable insights into approaches that lead to success in wholesaling regardless of the products or region. Let’s begin:
#1 Improve Your Business Model
We find that many wholesalers skip making a deep assessment of their wholesaling business model. This causes the organization and team members to operate in ignorance, increasing their dependence on workarounds and makeshift practices. At the end of the day, this results in yet another wholesale business that lacks direction and understanding of how to grow.
You should determine your business model and identify the exact reasons why you are in the industry. How will the industry change in the next 2 to 5 years? What market segments should you target? What is special about your operating model? What differentiates you from a lot of other similar wholesale businesses and is it enough to build a loyal customer base?
The answers to such questions will help you sharpen your business model and guide you through many complex questions like determining your target market segment and selecting the right products. In 2022, the global market for wholesale is expected to grow to $44 trillion, and thus, it is necessary to identify your unique positioning to tap into all available opportunities.
Once you have an idea of why and how your business will function, you can run a competitive analysis and an industry evaluation to discover your business objectives and unique selling propositions (USPs).
#2 Identify The Right B2B Sales Platforms
Ecommerce is fast becoming the prime avenue for wholesalers due to a number of factors. Studies show that the B2B customer experience makes a significant impact on millennials, who account for 73% of the decision-making population. Thus, they are the most influential group for B2B marketers and this is one of the reasons that has propelled the shift to online in the B2B sectors.
Wholesalers need to be present on B2B platforms to stay relevant to the market and ensure the long-term viability of their business. The Covid-19 pandemic acted as a catalyst for the online transition of B2B players and thus, you must position yourself on the right platforms.
It is no secret that B2B buyers can have a complicated purchasing journey and that requires you to understand the sector and region-specific dynamics. The below infographic rightly shows the intricacies faced by B2B buyers that wholesalers can solve to gain a competitive edge.
#3 Keep Your Business Plan Centered On Healthy Cash Flow
As a player in the wholesaling industry, inventory absorbs a huge chunk of your capital and you will inevitably need to be good at managing your cash flow. Maintaining a healthy, positive cash flow requires you to undertake the following processes:
Forecast Your Cash Flow: This is a basic calculation of your revenue vs. expenditure for the given remaining period of the financial year or beyond. It helps determine how much cash you will hold at different periods in the future and allow you to plan accordingly.
Demand Forecasting: Here, market intelligence and your wholesale inventory management software can be leveraged to forecast demand and ensure that your business is fit to meet periods of high demand proactively. This helps you manage and optimize your organization’s functions like procurement, stocking, sales and marketing, human resources management, and more.
Invoicing: To enhance customer service and by default, the customer experience, it is important to automate invoicing. This will streamline your cash flow management and ensure compliance with your sales policies which in turn become the basis of your cash flow forecasting.
Cash Reserve Management: Cash is important for all core and non-core organizational activities that require payment on an immediate basis. This includes salary disbursement, petty cash and cases where you have to cover unpaid customer debt to fulfill your commitment to other parties.
Here is a chart that will help you to understand the importance of cash flow management amidst uncertainties in the non durables segment:
#4 Develop An Efficient and Comprehensive Marketing Plan
It is equally important for wholesalers to promote their business to attract new customers, remarket their products to existing buyers and to increase the lifetime value of their client base. This has become increasingly evident, especially after the pandemic. B2B organizations like wholesalers need to be visible online and undertake digital marketing efforts just like any D2C organization.
Thus, you will need a comprehensive marketing plan for your wholesale business that covers all possible touchpoints and prospect sources. You then need to curate marketing materials and run a full-fledged marketing campaign across relevant channels to gain leads. Automation comes in handy in scaling an error-free process while also allowing you to benefit from features like lead grading and lifecycle management.
The current market requires integrated marketing campaigns. We recommend a holistic approach that includes collaboration with your sales team and other stakeholders.
Currently, there are significant opportunities available for wholesalers since many players may have exited recently while fresh demand continues to triumph.
#5 Hire The Right Talent
As a wholesaler, it is necessary to hire the right talent to take care of your large volume business. Like any other business sector, you need to choose them on the basis of your business case, short-term and long-term goals, succession planning and other criteria that will impact your growth capabilities.
To begin with, weigh your existing staff’s strengths and weaknesses, skills and the probability of an increase in output with additional resources and skill sets. This will help you identify the right candidates for your wholesale business with a clear understanding of what you expect out of them once they join. The below chart displays the stagnant condition of the current wholesaling industry employment market.
Regardless of what product you are selling, issues of scale remain common across businesses. Hiring proficient and talented people should be the main recruitment drivers for most job roles.
You may also want to ensure that they will be able to use the tools required to complete their daily tasks. It is natural that they will need training and on-the-job experience in using these tools, but it is necessary that they have prior knowledge of working with software packages and basic computer skills.
#6 Master Your Pricing Strategy And Get A Tool For It
Pricing plays a crucial role in determining your success as a wholesaler, but it doesn’t mean that you need to be priced as low as possible. It’s a fact that there’s plenty of competition in the market but trying to be the cheapest option is not going to provide you with any significant results.
Instead, you should keep your pricing strategy based on market dynamics and your unique value propositions. Thus, you should compete on the grounds of the value you deliver to your customers as opposed to competing on the basis of price. This will ensure that your bottom line stays healthy and you don’t lose sales simply because another player offered to sell at lower prices than you.
With this being said, it is necessary to buy a tool for pricing purposes if you are willing to sell on online B2B marketplaces. In fact, this becomes necessary since you may have many products to offer and setting their prices manually is not feasible or sustainable in the long term.
An automation tool helps you manage pricing based on multiple factors to maximize profitability. For example, if you are selling on Amazon, you can increase your prices when your competitors are facing stock outages without the fear of lost sales. There are numerous such scenarios where you need to adjust your prices in real-time.
#7 Invest In A Decent Ecommerce Automation Tool
Here’s the most important part of upscaling your wholesale business through online sales: getting a robust ecommerce automation tool that also acts as a wholesale sales management system. Most platforms require you to perform huge chunks of data entry work under tight time constraints. For instance, if your product is sold on one channel, it is necessary to update the information on the rest of your sales channels.
This volume of time-sensitive documentation is neither feasible nor sustainable for any wholesaler. Ecommerce automation software allows you to manage multiple channels, backend processes, documentation and all selling-related tasks on a centralized platform.
You should also expect benefits like optimization of your organizational culture as these software solutions help define and streamline various processes. Choose a solution that fosters collaboration and provides multiple types of reports that help your staff work in a unified manner regardless of the number of internal and external stakeholders.
The right platform should also provide efficiencies in accounting and finance, workflow management, integrated marketing, customer service and insights, data collection and analytics.
#8 Continuously Optimize Your Order Fulfillment Strategy
Order fulfillment remains one of the key areas which can emerge as a differentiating factor for your wholesale business since the shift to agile fulfillment is yet to happen in this particular sector. Lack of transparency is another issue that you can address with the help of 3PL partners. In most regions, shipping is entirely within the scope of the supplier.
Allow your customers to choose their preferred 3PL shipper so that they can also be in control of the costs and of processes like shipment tracking and returns processing. This also reduces your staff’s workload.
You will also need to integrate your organizational functions like warehousing, inventory management, material handling, receiving, picking and packaging. Thus, your order fulfillment will require a centralized approach to all concurrent activities in order to provide you with a competitive advantage over other wholesalers.
#9 Foster Good Relationships With Stakeholders
Every participant in your wholesale business’s success should get their due share of acknowledgement and appreciation alongside the expected cooperation. The account based approach is often overlooked because business owners are often focused on their stock and recurring orders as the two major business drivers.
We provide this tip as a reminder that, like any business, success in the wholesale sector relies on your ability to harness the full range of every stakeholder’s capabilities. This includes your suppliers, staff members, partner organizations, customers and consultants since their respective participation helps to sustain and grow your business.
You will need to set an effective communication strategy that includes both your internal and external stakeholders while effectively serving their interests. This includes self-service portals, tracking windows and automated emails as they enable seamless communication for transactional queries.
Also, consider dedicating a relationship management strategy so that you can manage your brand image proactively through time-tested methods like well wishes on personal occasions. Building a rapport with your stakeholders will also aid in boosting your brand image since many wholesale players still rely on the old-school methods. Account based marketing helps to build demand and eases customers into upsell offers.
#10 Operate On A Customer-First Operating Model
As we begin to wrap up, we want to reiterate the value of operating under a customer-centric model.
One of the ways to ensure that your efforts as an organization are directed towards customer experience is including value add to each process including demand forecasting, marketing, product lifecycle management and client support. It may require you to democratize insights within and beyond the organization so as to facilitate transparency.
Linking organizational culture to the customer experience is another approach that helps build a customer-focused environment, but it is necessary to check if you are overdoing it. Maintaining a fine balance between your customer’s expectations vs. your organizational and employee interests is the key to building a sustainable customer-first operating model.
If required, you can also opt for boosting employee-customer relationships through meetings, internal surveys and reports. You can also provide your employees with an opportunity to collaborate with different verticals, including the client-facing side of your organization.
#11 Constantly Monitor How Your Wholesale Business Performs
Despite the measures described above, it is important to keep an eye on your business through various metrics made available by software solutions and partner channels. This is due to the fact that market volatility, customer behavior augmentation, supply chain bottlenecks and change in government regulations are some of the factors that continuously impact your wholesale business.
On top of that, internal factors such as attrition and work culture also impact the results you get in the long run. Therefore, make it a point to include reporting and analysis as a core management function to keep your organization on the right track.
#12 Start A Couple of Experiments to Test Selling Directly to Consumers
Direct to consumer marketing (D2C) refers to manufacturers/wholesalers selling their products directly to the end-user which increases control over brand reputation and provides autonomy over sales and customer experience. Naturally, the D2C business model will prove more profitable and scalable than other indirect selling methods if approached correctly.
You can experiment with D2C selling but keep in mind that you need to take your staff into confidence and train them, build your presence on relevant D2C platforms and prompt your partners regarding the D2C transition. Remember, your approach should be customer-centric and focus on building a steady pipeline of leads.
It is clear that wholesaling organizations have ample opportunities at their disposal for improving their chances of success. But you may find it tricky to navigate through multiple growth drivers, so using centralized, automated solutions is a must.
Wholesaling continues to be an attractive avenue and despite the pandemic, it has shown great resilience. With these 12 steps, most wholesalers will find it easy to create and maintain mechanisms that will help them achieve success in 2022 and beyond. If you have any doubts or require suggestions, feel free to get in touch with experts at Cin7 to take your wholesaling business to the next level.