Wholesale Margins: A Game of Inches

By Joynicole Martinez

Product loses value from day one. In fact, it is often the case that wholesalers and liquidators have access to their product precisely because the rate of depreciation is too costly for the previous owner. So it is even more imperative that wholesalers work to creatively boost profit margins beyond simply increasing resale price.

Building your wholesale margins is a game of inches. A TechLiquidators customer recently requested more examples of adding value “up” distribution channels and building loyal customers. So let’s get right to it!

1. Choosing Your Source for Product

Your business may not be ready to become a factory authorized wholesaler. That doesn’t mean you can’t buy genuine products at or even below traditional wholesale prices.

A recent article sparked interest in buying product liquidations as a method of saving money. Working with liquidation specialists benefits the small independent business as well as the large manufacturer. Product returns are a potential risk for any business; where those returns end up can become a source of value and profit for the consumer electronics wholesaler dealing directly with the consumer.

Make it Happen: Buy inventory reductions and overstocks, freight claims, damaged containers, bankruptcy liquidations, chain store sell down, insurance and manufacturing buy backs, and ‘B’ grade merchandise. Your margins remain higher, even after adding additional value through add-ons or specials. Knowing why the product was liquidated helps you market successfully to the end user.

If you are purchasing and reselling products with damaged containers, simply stating that in a product description can mean higher margins. How many consumers would buy a high end digital camera in the summer season for half off retail pricing if it was new, but without the box, for example, but included a memory card upgrade, free data transfer cables or a 60-day warranty? You save money on the purchase, pass savings onto a buyer and build a loyal customer by adding value — just through careful selection of your source.

Purchasing pallets or loads containing product lines exclusive to specific retailers and using the Internet to market those products to targeted end users who don’t otherwise have access to those retailers is a savvy way to build a community of repeat buyers. This is how flash sale sites are successful (think CowBoom, RueLaLa or Ventee Privee). This keeps you within reselling restriction guidelines pertaining to store radius, builds your reputation as high end wholesaler, and protects your margins through the offer of high demand-low supply products.

2. Choosing your Source for Value

Remember, you are a part of the distributors’ channel. True value-added distributors empower through education (new products, sales tips, etc.), investing in marketing, and ensuring product availability. The relationship has to offer more than just competitive or discounted pricing. Pricing achieves short-term gains, but fluctuates widely, is easily replicated and is rarely sustainable unless linked to some other value strategy.

Make it Happen: High Value-Add Liquidators like TechLiquidators.com have aggregated the best in CE product vendors and offer products from screened Certified Sellers so you get the best possible price on high value items without spending the time searching out legitimate vendors.

Choose your distributor because they have strengthened their relationship with vendors.

3. Use Shipping to Increase Margins

Don’t just “mail” products to your customers. You also have to think beyond dropshipping. Shipping to your customers increases margins in two ways: (1) you save money by establishing a relationship with a shipper through volume usage, extra services and returns processes and (2) you add value for the receiver by offering tracking, visibility and notification. A smart yet customer-friendly returns policy can save you revenue losses from reverse logistics while gaining higher customer satisfaction ratings.

Make it Happen: Build a relationship with a shipper that offers flexible pricing and timing options, package pick up from your location, real-time tracking with notifications to you and the receiver, and customizable, printable return labels so you save time, add transparency and offer convenience to your customers.

Ready to rethink your channels and preserve your profit margins? Keep an eye out for part 2 of this series, adding value at the point of sale.

How to Handle Product Returns

By Joynicole Martinez

The research and analysis company Aberdeen Group estimates that 8% of revenue from high-tech companies is spent in managing their reverse logistics functions. As long as products are sold, you’ll deal with returns. However, moving the process of handling product returns from an ad-hoc solution to an effective strategy can help recover revenue when returns are requested.

To begin recovery, returns management must include an in-depth look at the consumer return request. Knowing the reason for the product return helps you identify whether:

• The inventory requires quarantine.
• The conversation with and return to the vendor is necessary.
• The customer is requesting a simple return.

Customer complaints may suggest follow-up beyond accepting the merchandise and offering a refund.

Empowering the person taking the complaint to deal with the issue helps quickly assuage customer disappointment and may keep the customer from taking the issue more public.

If this is not possible, having a person up the leadership chain take ownership of the issue and engage in communication can turn a customer with a negative experience into an advocate. Customers appreciate businesses that are transparent regarding weaknesses and wrongs and work to quickly solve and repair them.

What happens if the inventory is defective?

When inventory requires quarantine, it is still accounted for, although removed or segregated. Your business requires a system that allows tracking and valuation of the goods while preventing the goods from being consumed or shipped and that keeps the inventory out of planning or allocation calculations. This may be a physical location, through an inventory management system or a combination.

Software-based inventory management systems can aid you in quickly identifying and collecting information regarding the product and shipment –  original purchase order or packing slip numbers, invoices and product order quantities — before contacting the original vendor. Often this information is required before vendors will issue a return material or merchandise authorization (RMA) to your company.

Verifying the Return

Beyond ensuring that you establish positive communication with the customer, you must be sure you are accepting a valid return. This process begins with a clearly written and presented return policy. Before issuing an authorization for a return:

• Verify that the item was purchased from your business.
• Establish that the return is within the policy timeline.
• Confirm that guidelines regarding company contact and providing proof of purchase are followed.

Remember, should returning the product to your original vendor become necessary, you want to be sure your intake of the product does not invalidate any warranty or breech policy  provided to you.

Should the transaction require you to ship replacements immediately without waiting for the return of the previously purchased item, you must also track the newly shipped item, estimated return dates of the defective product, the intake and exchange and the issuing of new invoices or credits.

Several other items to consider when handling product returns are:

Compliant recycling – defective products that are not being returned to a vendor are disposed of and recycled according to manufacturer and legal guidelines and policies.

Data destruction and erasure – this is extremely important in high-end electronics, where personal and sensitive data is often stored, such as computers and mobile devices.

Testing and screening – if there is no fault found, the product can be remarketed and sold, recovering value for your business.

Handling a product return requires three general system approaches:

(1) Providing excellent customer service, beginning with clearly posted policies regarding returns and warranties and ending with follow-up communication and resolution.

(2) Verification of the return to ensure your business can accept it, can send it back to the original vendor and will have minimal financial exposure once the product is back in inventory.

(3) Return or remarketing the product to help recover any costs or losses, which includes testing and resetting the product to factory defaults. A systematic approach to returns can keep you from alienating customers or placing product into a holding pattern that keeps it from being sold or credited. Your shelves will stay clearer, your product will move faster and your bottom line will boast your efforts.

Dealing with Competition

By Joynicole Martinez

The distinct characteristics of the wholesale industry make it easily identifiable as a growing and open market – and competition is a natural part of any market, increasing as technology impacts globalization. But rather than a negative aspect of doing business, competition can be a valuable tool for building success.

Competition improves efficiency in operations, encourages transparent price discovery and can lend balance and innovation to the distribution pipeline. Studying the competition can help you build a business responsive to the needs and wants of your customers, keeping your competitve advantage in tact. In this article, we present four methods for responding to shifts in competition.

Adding Value as a Competitive Advantage

Providing greater benefits and higher-quality services can positively affect your image and reputation. The benefits do not necessarily have to be financial. Consider the
customer’s choice and think about purchasing from companies that offer:

• Fair Trade Certification
• Green and Organic Products
• Consumer Reports Best Buys

Or perhaps you can find a unique advantage in customer service offerings. Generous policies on returns and exchanges, warranties and repair contracts can create a gap in services that can send customers your way. When dealing with high-end electronics, offerings such as these have the added impact of increasing the credibility of your brand.

If your customers feel you’re honest about the quality of the product, they are more likely to believe in the product’s longevity. This is a value add that Maytag, for example, uses effectively. They offer a differentiation strategy of reliability and quality which they have used to develop a competitive advantage for half a century.

Strategic Partnerships and Alliances Close Gaps & Minimize Competitive Saturation

As you continue to evaluate your strengths, weaknesses, opportunities and threats you will find there are areas of your business or distribution pipeline that need shoring up. An effective partnering strategy identifies how an alliance with a complementary key supplier, competitor or customer can maximize potential.

The first step in increasing the value of your relationships is understanding their nature and classifying them. Compare your distribution channels with your competitors. Carefully monitor and track customer purchasing practices and trends. Assess alternative distributor networks and marketing methods.

It also helps to build strong supply chains, and use those mutually beneficial partnerships to market to customers.

An effective example of this would be Apple’s alliance with Intel, whose processors power Apple’s computing systems. Complementary strengths helped Walmart and Hewlett Packard grow sales, as HP placed computers inside the retail stores. Those companies worked together to provide specially priced models inside the stores that would draw consumers from traditional electronic retailers. As you consider alliances, ask yourself:

1. Is there a clear overall purpose and objectives accepted by each partner?
2. Do we have an equal commitment to the partnership?
3. Are our organizational structures similar enough to work together?
4. Do we share core values?
5. Have we agreed upon methods for problem solving and conflict resolution?

Finally, make sure the allocation of resources is fair. Each partner must commit an appropriate share of resources, reflecting the benefit the alliance brings to each.

Using Technology to Bring Cost Leadership

Thanks to the Internet, customers today have the tools to be increasingly cost conscious. Wholesalers can take advantage of online technology in reaching potential and retaining current customers. Cost leadership means keeping your costs low, turning your services and goods around quickly, and controlling supply and procurement chains effectively.

• Direct mail is considerably more expensive than email marketing. To minimize costs, consider contacting your market through email. Add value with embedded how-to videos, links to user guides or product registrations and incentives for your email-only market.
• There are many low-cost customer relationship management systems available that can help you stay in touch with your base. Contacting partners and customers on special days such as CEO and customer birthdays, or anniversaries of the first transaction expresses a level of care that not only works as a comparative advantage but also builds trust and loyalty.
• Electronic tracking of shipments with automatic updates keeps your brand in front of the customer and reassures them when transactions are completed completely online. Furthermore, drop shipping keeps costs lower by removing the need for storage and warehousing overhead. To increase the effectiveness of this technology in bringing a competitive edge, offer SMS updates, or the option of a phone call when a package arrives. For a small business or start up wholesaler, these service additions can make a significant difference.

Competition is an innate part of doing business. Over time you’ll get a more clear understanding of how your competition functions within the marketplace, their respective strengths and weaknesses in comparison with your own, and how to take advantage of those differences. Whether through price differentiation, service quality and value adds, or joining forces to provide a better total customer experience, competition is a tool that, when wielded effectively, builds a surer foundation and sharper company.

Post a Comment

How Wholesalers Can Tackle Risk

By Joynicole Martinez

In a previous post, Jason Brick articulated the risks involved in running a wholesale business.  In this post I will dive a little deeper into the topic to equip you with the skills to navigate the risk you will inevitably face. So let’s get right to it.

Entrepreneurs realize that there are risks inherently associated with the rewards of business ownership. Understanding and clearly identifying the risks you’re willing to accept, transfer or avoid allows development of a mitigation strategy that is tailor-fitted for the business and industry.

Wholesalers face exposure to traditional losses, such as accidents, injuries, liability claims and property losses. Implementation of company safety training programs, use of ergonomics, emergency response planning and worker’s compensation plans manages many of these risks.

However, when dealing with an Internet-based business, an electronic inventory database, multiple client accounts handling large quantities, importing manufactured products from overseas, shipping and high-end, high cost technological devices, how does the wholesaler optimize handling of exposure?

Insurance of Goods

Wholesale products may lose value in storage because of climate, or in transit due to mishandling misplacement, wear and tear. There is potential for loss due to damage by rain, fire or other natural disaster. Commercial insurance plans, though requiring continual premium payments, can reduce this risk by either:

1. Insuring products in transit
2. Insuring products in warehouse

A solid plan will cover your merchandise against potential losses, no matter where they occur.

Some consider risk management and insurance synonymous. However, while a risk management plan should encompass insurance, insurance alone does not deal with loss prevention and minimization.

Supplier Research

When conducting business online, there’s the risk of dropshippers or suppliers providing fraudulent or misleading advertising, information or products.A company may fail to provide products for which funds have been transmitted. Escrow services are excellent for handling controlled disbursements or asset safekeeping.

While it’s impossible to completely eliminate this risk, researching suppliers before agreeing to purchase from them can help mitigate this risk.

Beyond visiting their website, online review pages can provide information on transaction or product red flags or recurring issues. A search of a company’s profile with organizations such as the Better Business Bureau or Dun & Bradstreet should be a standard step when considering suppliers.

Information Risk Coverage

Information drives the planning, storage, distribution and retrieval of goods. Costs from losses could include those to recreate information, operational delays related to data disruption, inventory miscalculations due to software malfunctions, and halted operations due to hardware failures and interruptions.

Using products that cover information risk for network security, media and privacy liability and issues related to just-in-time warehousing practices can provide preparation for infrastructure disruption, customer data breaches and component failures.

Continual Market Research

Wholesalers must carefully balance market penetration with risk mitigation. Fluctuating demand, retailer default and closures, changes in and the impact of advertising media make the industry an ever-changing landscape.

Market and trend data helps wholesalers make better choices in product and quantity. Starting a business by evaluating market trends is important; continuing to study those trends throughout the business life cycle is critical.

Risk is an intrinsic part of doing business. Identifying your company’s risks, deciding which are avoidable and how to minimize exposure to others is a part of every owner’s business strategy.

There are risk management strategies aimed at supply and demand planning and coordination, and those that deal with more specific efficiency gains and cost reduction. Careful consideration of your product and market frames the risks and methods necessary to keep them at bay — and your company bay doors open.

Post a Comment

Trends In The Wholesale Industry

By Joynicole Martinez

For more than a century, wholesalers have improved the exchange efficiency of the marketplace. Intermediaries reduce prices and contacts and create utility, simplifying commerce.

Recent advantages impelled by the Internet have created a global wholesale industry that moves information and goods faster and introduces greater variety in product and brand to a market. Development and innovation in technology has not only changed the supply chain, it’s creating an increasingly dynamic and interactive customer relationship and the manner in which wholesalers market to their target audience.

Supply Chain Trends
According to Modern Distribution Management, the wholesale distribution industry outpaced the U.S. economy in 2010. Tom Gale, president of Gale Media reports distributor revenues increased by approximately 10% more than the nominal U.S. GDP. Wholesale distribution of high-end electronics continues to prove itself a growing industry.

Because of growth and increasing competition, suppliers are winnowed out based on cost and quality, there is a resistance to increases in price and vertical integration occurs more frequently.

Increased vertical integration means elements from Business to Consumer online trade are finding their way into B2B practices and systems. Whether or not you are selling directly to consumers, you must consider the value adds that coincide with each sale.

Transparency regarding buying habits and patterns, supplier pricing and composition of product lines can change the way a purchasing manager views your business. E-commerce and procurement also means product evaluations and reviews, facet searches, features highlights and product suggestions become increasingly important to the seller or reseller.

Consolidation
The supply chain is developing new characteristics. Not all distributors have interest in integrating those characteristics into their business model. It may not be economically viable or advantageous for a larger company to incorporate them, making consolidation with other companies attractive. This trend leaves an open door for smaller wholesale distributors that specialize in products.

Entrepreneurs can find success by filling the gap created by the national companies. Distribution has changed from a local, to a national and now global business. Larger, national businesses cannot or do not care to service certain clients cost effectively or profitably.

This leaves an open door for small businesses willing to offer smaller sized lots, add value such as installation, repairs, product groupings or warranties, or create an e-commerce solution that offers a catalog of specialized goods, niche or trend products, or payment alternatives.

Social Media and Social Shopping

Being “online” also means your business understands the influence of social media and networks on your customers. Another way the relationship between the wholesaler and the customer is changing is due to the rise of social shopping.

Collective buying sites like LivingSocial and Groupon, invitation only sites such as Rue La La and Vente-Privee, and liquidation sites offering auctions and varied lot sizes allow customers to seek advice from other buyers and their “friends” on companies and products.

Savvy entrepreneurs will take advantage of this trend, offering their products or unique price discounts through various sites, ensuring their company has a presence on the major social networks, and using auctions as a way to build a loyal customer base of buyers that can only afford to purchase smaller lots yet require a diversity of products.

The growth of the wholesale distribution industry is due in part to its ability to adapt to innovations in technology and market climate. The Internet, RFID, vertical integration, CRM and inventory management software, social media, etc. advance the way wholesalers behave and relate to their markets.

Changing your business behavior to keep pace with the changing trends in technology and customer relationship management is not only a requirement in the wholesale distribution industry, it’s good business management.

Post a Comment

Dealing with Product Liquidation

By Jason Brick

Product liquidation means sellers are open to converting their held assets into cash, even if their business takes a loss on the transaction. For a wholesaler, this can be an opportunity to pick up merchandise at a steep discount, which can then be sold at increased profits on a fast turnover.

This may sound like a no-lose situation for your business, but it carries its own set of risks. The downsides change based on why a product was liquidated.

Getting wholesale product is like shopping clearance sales every day. 

Shelf-Pulls, also called overstocks and surplus inventory, are items a merchant has taken off the selling floor after it hasn’t moved over a period of time. They can then use the space for an item they feel will more likely sell. Shelf-pulls often come in larger lots, as sellers clear their entire stock at once.

• Advantages of shelf-pulls include low prices, even as compared to other liquidations, larger lots, and the like-new quality of the merchandise.
• The main disadvantage is that the seller was unable to sell the stock. You might have similar difficulty, but priced right, this should be less of a problem. 
• Processing shelf-pulls can be labor-intensive, as you sort through the lots to find the most suitable for your shop; individual items,on the other hand, usually require little work to make them ready to ship. 

End of Season liquidations are exactly what they sound like. Businesses are looking to clean house, so that they can bring in new merchandise. A sporting goods warehouse, for example, might want to liquidate its wrestling shoes in March, so that it can make way for track-and-field equipment.

• The advantages of end-of-season liquidation include like-new quality of the merchandise and a potentially fast turnaround. Many people specifically shop for after-season bargains.
• The disadvantages include a potentially limited selection of colors, sizes and styles, and of course the risk that you won’t be able to move the stock in the off-season, either.
• Processing  end of season liquidations can be quick, if you’re able to get a fast turnover. Otherwise, you may be stuck storing the merchandise until next year’s season comes around.

Customer Returns are merchandise a customer sent back, that the seller was unable to resell for a variety of reasons. These are rarely sold by themselves during liquidation; instead, they’re usually included   in larger lots that may or may not consist entirely of other returned items.

• The advantage of customer-returned items is a strong potential for rapid turnover because these are items that people have recently purchased.
• The disadvantages include a higher chance of damage or other problems with the merchandise, as well as a limited selection.
• Processing this kind of order can take more work than other liquidation options. Customer-return packaging can be damaged, and even undamaged packaging might have the merchandise stuffed in haphazardly. Other items might show signs of wear, which you’ll have to correct before selling to the general public.

Remember, no matter what kind of liquidated merchandise you’re thinking about buying, the most important thing to keep in mind is your customer base and their buying habits. When you purchase lots that fit your customers’ demand, you’ll be successful with your sales.

Post a Comment

Taking Pre-Orders to Maximize Profits

By Jason Brick

Unsold or slow-moving inventory makes your cash flow sluggish, fills your stock room, and reduces your profits. Taking pre-orders can help avoid these issues.

Pre-ordering basics

Pre-orders for merchandise means customers are paying for products not yet released. Common examples of pre-ordered items include buying a book or movie before it’s available, or ordering an iPhone.

When the items come in, you then make the purchase and deliver on your contracts. This has several advantages over the traditional stock-in-house method.

• On paid pre-orders, you purchase the merchandise with money you received from the customers who want the items.
• You reduce the amount of time merchandise sits on your shelves.
• You can more easily calculate profit, loss and cash flow with this direct-to-customer method.

Pre-ordering can help prevent scenes like this.

Methods of pre-ordering

You can take pre-orders in several different ways, keeping in mind that all methods are easier if administered automatically via computer. Here are three ways for you to go forward.

• Paid pre-orders have a customer paying full price for an item, understanding completely that while you don’t have the merchandise on hand, you will deliver it as soon as you do. This kind of pre-order can be risky, as Target learned to its dismay when it accepted orders for its Missoni collection, and then did not have sufficient merchandise to fulfill them. Customers were irate; they didn’t want their money back, they wanted the designer products.
• Pre-order lists means a customer leaves his contact information and any specific product details you need to complete the transaction–such as color and number of units. When you reach your requisite number of orders, you then purchase the merchandise and contact customers for payment.
• Dropshipping refers to only ordering stock from a warehouse as orders come in–those orders are then shipped directly from the warehouse. Print on demand books fall into this category.

Legal risks with pre-ordering

In some states, taking orders for an item you don’t have in hand is considered fraud. If you plan to use pre-ordering in your business, consult with your lawyer to be sure you’re following the law in your area.

It’s in your best interests to always make the entire process transparent, and avoid allegations of fraud. You can do it by following these steps.

• Be clear in your item descriptions and on your payment page that this is a pre-order, to be delivered as soon as you have the stock.
• Send each paying customer an email each week updating the  status of the pre-order.
• Maintain cash reserves sufficient to refund orders until the merchandise has shipped.

Post a Comment

Understanding Risks in Wholesale

By Jason Brick

Wholesaling — especially online wholesaling — can seem like a “can’t lose” proposition. You buy items below their regular price and sell them to people for a profit. Even if you can’t sell for top dollar, you should be able to sell them for enough money that you don’t take a loss, right?

Unfortunately not. Every year, hundreds of wholesalers go out of business because they failed to adequately understand and protect themselves against the risks of this business model. To avoid joining them, you must diligently do your research into how wholesalers fail — and what you can do to stop or mitigate it.

Buying Generalized Product
Big box stores have the market cornered in having something for everyone. For you, that approach means spending too much money on stock that may sit around unpurchased for months. The better bet is to focus on a smaller, niche market.

As a reseller, your secondary market demand trails behind the product lifecycle phases. As demand decreases with a product's age, resale value generally decreases .

Market Changes
New technology or fashions can leave you stuck with a batch of stock nobody wants anymore. This risk is especially high when buying from stock liquidators. They sell batches of product another seller no longer wants, and they might know something you don’t.

Product Loss
Damage and theft to your stock is a risk for any wholesaler or retailer. Loss during shipping can be mitigated by going after the shipper, but even this takes time. A reasonably affordable insurance policy can be a good safety measure against this risk.

Marketing Wastage
They say half of marketing money is wasted. The trouble is figuring out which half. If you spend your marketing budget reaching nobody — or reaching the wrong people — this can kill your business as surely as a high-profile recall. This is another risk you can minimize by going after a niche market. Niche customers are easier to find and keep, a fact that maximizes your marketing effectiveness.

Too Much, Too Soon
It’s natural to get excited about your new wholesaling business, especially if you see signs of early success. However, expanding your reach too early is a good way to become overextended and ultimately crash. Scale up your business in increments by adding one product at a time, or expanding into new markets slowly. This prevents you from risking too much by throwing money into a new option that doesn’t work out.

It’s not impossible to make money as a wholesaler, but it can be difficult. The more you hedge against — or avoid entirely — these risks to your business, the easier it will be.

Now that you understand it, learn how to tackle risk in wholesale.

Post a Comment

_________________________________________________________
Part 5 in a 5-week series titled “So You Want to Be a Wholesaler?” – an introduction to starting and optimizing your wholesale business for success. Over the next few weeks, we’ll dive into many of these subjects in greater detail and provide tried and tested insights from other successful business owners, industry experts and even some of the leadership at TechLiquidators.

Finding and Developing Sales Channels

By Joynicole Martinez

Distribution is one of the “4 Ps” of marketing: product, price, promotion, and placement (also known as distribution). How and where you place your product is a key element in your wholesale business’ marketing strategy — it allows you to expand your reach and grow revenue.

According to RetailSails, e-Commerce sales grew by approximately 15% in 2010 to more than $165 billion, representing more than 4% of total retail sales.

While the online marketplace experienced struggles as consumer spending decreased, online retail growth still significantly outpaced other forms of retail over the long and short-term.

The combination of direct and indirect channels used by companies has appreciably changed over the last decade. This channel mix transformation, including direct and indirect channels, has allowed companies to expand into new markets and target increasing numbers of paying customers.

But you can’t begin identifying appropriate channels until you understand the routes to market currently in use in the wholesaling industry, the goals of each channel and the needs to achieve those goals, and the level of integration necessary for each channel. Once this framework is in place, you can begin to locate and develop routes that best support your network and business needs.

Begin With the End in Mind

The phrase may seem cliché, but the best way to prepare for success in wholesaling is to consider the end user and your company’s relationship with them.

Remember: As a wholesaler, your clients have their own customers to satisfy. This means they have more at stake than an end user shopping at a discount outlet does. You must clearly understand your customer and their specific needs. A few guiding questions are:

• Do your customers need personalized service? Either you are going to provide that service, or you may consider using a local dealer network or reseller program.

• Is your customer market Internet based? E-commerce websites and fulfillment systems allow you to sell direct. Indirect channels are also developed online; you can sell to other online retailers or distributors.

• Does your business concept require a specialized sales team to identify prospective customers and close sales?

Capacity

After clarifying your client market and needs, you next must clarify your company’s capacity. This will also determine whether you are a merchant or functional intermediary, based on whether you take title or ownership of the products you sell or expedite exchanges.

• You need the capacity to deliver products quickly throughout your channel, if not your customers may use alternate sources for supply.

• Should it become necessary to take back a large amount of product, how are they returned, at whose cost and delivered where? This is especially significant if you do not have a physical warehouse.

• How much control do you require over the sale process to the end user?

• What level of credit are you willing to extend and using what variables or standards?

Now that you’ve considered your organizational goals and market characteristics, product attributes and environmental forces come into play.

When dealing with technology, there is less chance of perishability, no storage requirements for multiple sizes or fashion trends to consider. You must consider, however, competition and changes in technology trends and innovations.

Once you have determined the types of sales channels, the next steps are characteristics; channel width, distribution intensity and market exposure.

In intensive distribution, wholesalers use all available outlets, maximizing exposure. For an Internet-based wholesaler, this may include a combination of online auctions, sales through email campaigns, flea markets, B2B surplus sites and discount retailers.

In contrast, selective distribution would limit channels based on some characteristic such as geography or online-only channels. Exclusive channel distribution usually employs place utility and uses the exclusivity factor to draw in sellers, as there is little price competition.

Best Partnering

Finally, you can move on to partner development. You may choose to delineate your partners by brand, market segment, and/or value added services.

No matter how you determine which partners, manufacturers or retailers to work with, you must develop resources and activities to support your sales and distribution channels. These resources build the relationship between you and the members of your channel. Consider:

• Product Use Training
• Sales Training — especially if you have an exclusive, new or innovative product Customer service

In developing your sales channel, take into account the balance of responsibilities and costs. Consider your internal resources as well as the complementary strengths and capabilities of your distributors and partners.

Finally, create an internal marketing and support plan used in maintaining and expanding the relationship within the sales channel.

Careful goal setting, characterizing and evaluation of your internal plans and strengths, market trends and targets and relationship capacity will lead to a strong sales channel, whether indirect or direct, intensive or selective.

Post a Comment

_________________________________________________________
Part 4 in a 5-week series titled “So You Want to Be a Wholesaler?” – an introduction to starting and optimizing your wholesale business for success. Over the next few weeks, we’ll dive into many of these subjects in greater detail and provide tried and tested insights from other successful business owners, industry experts and even some of the leadership at TechLiquidators.

4 Tactics to Maximize Returns

By Mark Di Vincenzo
Mark Di Vincenzo is a journalist with 24 years of experience, a New York Times best-selling author and blogger with Contently.com.

Buying low and selling high is a goal of anyone who wants to make money, whether they invest in stocks and commodities or they see something at a garage sale that they think they can resell at a profit. Wholesalers are all about buying low and selling high, and it helps explain why they have the potential to make a lot of money — and why the best ones do.

The most successful wholesalers have their own tricks of the trade that help them beat their competition, but they all basically do these four things, and do them well:

Deal in popular, everyday products. The best wholesalers sell what the masses want to buy, such as clothes, accessories, electronics, purses and jewelry.  Doing this ensures they’ll broaden their market and have more potential customers. The more potential customers, the more likely they can make lots of sales. The best wholesalers find a specialized niche they can run with — for example, a product that sells well regionally but has the potential to sell well nationally.

Sell high-quality products. Selling popular items might allow wholesalers to make a quick buck, but they won’t stay in business very long if they’re selling junk.

Resist the temptation to take advantage of a great deal from a supplier who’s selling low-quality merchandise. Employ an excellent quality-control worker who knows the good stuff from the bad.

The best wholesalers depend on repeat customers, and the best way to ensure repeat customers is to sell high-quality items at a fair price. Selling cheap merchandise will not only turn off a wholesaler’s customers, but the customers – or rather, the former customers – will trash him to potential customers.

Develop fast operations. This almost doesn’t require any explanation, but we live in a society where we get impatient if we spend more than a couple of minutes waiting for hamburgers and fries in a drive-thru line.

The best wholesalers fine-tune their operations so that their suppliers ship to them quickly and their customers don’t have to wait long for their purchases.  Customers expect whatever they buy to get to them as fast as possible.

Market your products well. Any good businessman or woman knows that few things are more important than marketing. If they’ve got a great product to sell or service to offer, and no one knows about it, then they won’t stay in business very long.

The most successful wholesalers employ a marketing professional. They also get tips from the suppliers, who know the product better than anyone, and develop relationships with business professors whose students can turn the wholesaler’s marketing problem into their class project.

Buying low and selling high should always be your goal, of course, but make sure you’re selling popular, high-quality merchandise that potential customers are aware of and that you can get in and out the door very quickly.

Post a Comment

_________________________________________________________
Part 3 in a 5-week series titled “So You Want to Be a Wholesaler?” – an introduction to starting and optimizing your wholesale business for success. Over the next few weeks, we’ll dive into many of these subjects in greater detail and provide tried and tested insights from other successful business owners, industry experts and even some of the leadership at TechLiquidators.