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It is not always easier or more advantageous to sell a product to a customer than to sell it to a vendor. Depending on your requirements, sometimes selling to some vendors is better and more advantageous that selling to the final customer.
Many people sell to the last customer and are unsatisfied with their returns; perhaps you can’t get as many clients as you hoped for, or perhaps you can’t get the kinds of profits you would be happy with. In this case, you may want to consider moving up a rung and wholesaling rather than retailing.
Wholesaling is a good way to grow your profits as you will now be vending a higher volume of goods at a faster rate. However, it is not as simple as saying, “I will be a wholesaler now,” and simply starting. It is a bit of a specialized business that requires some learning.
There are various advantages to switching to wholesaling. One is that, if you are wholesaling your products, you are opening up the marketing of your goods to other businesses. You will be killing two birds with one stone. If you are wholesaling other people’s goods, you will still gain as you will increase your revenue stream.
One problem, though, is that you will not be able to control how your goods are marketed by the businesses you wholesale them to. They are the retailers, so they will determine how they’ll market your goods.
Once you are a wholesaler, you have two types of customers: retailers and consumers.
If you want to keep business flowing, you have to make your retailers feel special. This means, simply, that when you set the price of your products, firstly think about what your clients would be willing to pay for them. Then, take out a fraction of that cost and charge the difference to your retailer. As a result, the retailer will make a profit on the goods. It may look like you’re taking a loss but consider the fact that your retailer buys goods in bulk and that he/she will keep coming back to you.
So, if you make a product that you want the consumer to pay $30 for, you can sell it to the retailer for $15.
It would also be smart not to go to your retailers. For instance, do not announce a big sale that you know your retailers will not like. Again, make your retailers feel special.
Since you will be selling your products (essentially) at a loss to your retailers, you will want to sell lots of them to ensure you make a profit. To do this, you should probably consider coming up with a rule where your retailers can order no less than a particular minimum amount of goods or minimum value of goods. This way, you can at least ensure that your goods are always bought in bulk, and you will, as a result, make a profit.
Here are some examples of how you could offer your goods’ pricing:
- $15 per unit if you purchase 100 units
- $10 per unit if you purchase 500 units
- $5 per unit if you purchase 1000 units
This way, you will encourage your retailers to purchase goods in bulk as they would save more money by buying more.