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Sophie - Ecommerce Coach

How to Sell Products Wholesale

A Guide for Small Businesses Wanting To Add A New Revenue Channel

When you’re running an e-commerce business, the idea of having your product stocked in your dream retail and expanding your sales channels is always appealing. Wholesale is one of the best ways to scale your business, but not always in the way that business owners think…

There’s usually 2 reasons why small business owners would want to wholesale their products.

  1. To increase revenue from a new stream.
  2. To build brand awareness and credibility.

A common misconception that many of my clients have is that selling wholesale is going to be a game changer for the finances in their business, but unfortunately that is not always the case. I’ll explain why later on.

Before that let me explain what exactly is wholesale, and how does it work for small businesses?

What Is Wholesale?

Wholesale is essentially the sale of goods in larger quantities, usually to retailers who then sell the products directly to consumers. Instead of selling your products one by one direct to your customer, you’re offering them in bulk to a third party person or business, which gives you the opportunity to move larger quantities at one time. This means you’ll naturally sell more units, but at a lower price per unit than you would if you were selling directly to your customer. Meaning lower profit margins.

For small businesses, entering the wholesale world can definitely open up new doors. It allows you to expand beyond your direct-to-consumer channels, tap into new markets, and build relationships with other businesses.

However before you begin to sell wholesale, I truly believe it’s essential to understand how wholesale business works and how to set yourself up for success before jumping in.

Wholesale vs Ecommerce/Retail: What’s the Difference?

In the retail or ecommerce model, you’re selling directly to the end customer, who typically buys one or a couple of products at a time. You’re in control of your pricing, marketing, and all aspects of the customer experience.

Wholesale, on the other hand, involves selling to other businesses, like retailers or distributors, in bulk quantities. These buyers will then resell your products at a retail price (that they will determine) to their existing audience.

The main thing you need to know about the difference between the 2 is your profit margins are going to be way smaller in wholesale because you’re selling at a lower price, so that both parties (you and the re-seller) can make a profit margin on the products.

The wholesale re-seller is not required to sell your product at the same RRP as you, provide the same level of service as you, or offer the product in the same way that you do, so when you release the sale of your goods to the re-seller you lose complete control of those units that are going to be sold. You can of course put some measures in place for you to influence how and where your product is sold, but this needs to be agreed when you go in to partnership with your re-seller to make sure there are no issues later down the line.

Where to Wholesale Products

One of the biggest questions small business owners have is where to wholesale products. There are several ways to approach this, depending on your business model and industry.

  1. Trade Shows: Pros: These are great opportunities to connect with retailers and other businesses. By setting up a booth, you can showcase your products to buyers who are actively looking for new stock. Cons: Trade shows can be expensive.
  2. Online Wholesale Marketplaces: Pros: Platforms like Faire for example are dedicated to helping businesses like yours find wholesale buyers. These platforms make it easier to connect with retailers from all over the world and manage wholesale orders efficiently. Cons: You never 100% know where your product is then going to be sold to as it’s all done online rather than with human interaction.
  3. Direct Outreach: Pros: You can directly find buyers for the shops or retailers you want to stock in and pitch to them to see if they’d be interested in carrying your products. This method allows you to build more personal relationships with your buyers and longer-lasting relationships. Cons: It can be hard and time-consuming to find the right people to approach and you’ll often be met with a lot of rejection. (IMO this is the best approach and the one I’ve seen the best results with personally – I once generated £176k in 6 months for a handbag client of mine by direct outreach, getting her bags stocked in Harvey Nichols, Fenwicks, La Samaritaine and more.)
  4. Wholesale Distributors: Pros: Working with a distributor can take some of the pressure of managing wholesale orders. Distributors act as middlemen, buying your products in bulk and selling them to retailers, often this means you can expand into new markets you’d have found harder to reach before. Cons: Again you lose some control of the process as the distributor will lead the sale. You’ll also lose more margin this way as the distributor also needs to make a profit so you are splitting profit 3 ways.

How Wholesale Works: The Basics

To get started in wholesale, there are a few basics you need to understand. How wholesale works involves more than just offering a discount for bulk orders. It’s about setting up systems to handle larger quantities, building relationships with buyers, and adjusting your production to meet demand.

  1. Setting Wholesale Prices: Knowing how wholesale price is calculated is key to ensuring profitability. There’s no one rule for this – every reseller will work differently, but typically, your wholesale price is about 50% of your retail price. This gives retailers the margin they need to make a profit. To calculate your wholesale price, you need to factor in production costs, overhead, and a reasonable profit margin. It’s crucial to ensure your wholesale price covers all these costs so you still make a profit, whilst also remaining attractive to retailers. I have a lot of clients come to me to work through their wholesale pricing in a 1-1 strategy session, so if you’re lost on where to start with your wholesale pricing to maximize margins click here to book yours in.
  2. Minimum Order Quantities (MOQs): Most wholesalers set minimum order quantities to ensure that they’re getting large enough orders to justify the lower pricing. For example, you might require a retailer to purchase at least 100 units of a product to get the wholesale price.
  3. Shipping and Logistics: Wholesale orders are larger, which means shipping can become more complex. You may need to work with logistics services for bigger orders or figure out ways to streamline your packing and shipping process to handle the volume.
  4. Payment Terms: Unlike retail, where payment is usually immediate, wholesale often involves extended payment terms. You might offer net-30 or net-60 payment plans, which give retailers time to sell your products before they need to pay for them. Make sure your payment terms are clear and work for both sides. Larger retailers will have non-negotiable terms you’ll likely have to work to.

Wholesale for Small Business: Getting Started

If you’re a small business owner wondering how to get started in wholesale, the key is preparation. Here are some steps to help you kick off your wholesale journey:

  1. Ask yourself WHY are you selling wholesale? As I said at the beginning there are usually 2 reasons.

    1. To increase revenue from a new stream.
    2. To build brand awareness and credibility.

    Many small businesses, are not set up to sell in huge volumes and also struggle to get in with retailers that would buy huge volumes, so having the goal of drastically increasing your revenue is probably not so realistic. I talk a bit about this in this podcast episode here

    The big benefit however of selling your products to the (right) resellers is that you can get your products in-front of a new audience and build wider awareness and credibility for your brand, which in turn can lead to increase sales directly.

  2. Refine Your Product Line: Retailers are looking for cohesive, well-made product lines that fit their stores and offer something new to their customers. Before reaching out to buyers, make sure your products are relevant to the resellers you are reaching out to.

  3. Create a Wholesale Catalog: A professional-looking wholesale catalog or line sheet is essential. This document should include your wholesale prices, minimum order quantities, product details, and payment terms.

  4. Pitch to Retailers: Whether you’re attending a trade show, using an online platform, or contacting shops directly, your pitch matters. Explain how your products will benefit their customers and why they should choose your brand over others. Be super clear about your USP to get them excited about your brand! It’s also important to pitch to the RIGHT retailers because you want to make sure whoever is representing your product sales does it justice!

  5. Scale Your Operations: Be ready for increased demand! Wholesaling can lead to bigger orders than your business is used to, so ensure your production and logistics process can still work efficiently with increased order quantities.

Is Wholesale Right for You?

Wholesale is an excellent opportunity for small businesses, but I’d really only recommend it if you have laid down solid foundations for your own business first.

You should consider setting up a wholesale channel for your business as literally setting up a whole new business entity as it is a completely different operation than trading direct to consumer.

I have an online course that talks you through the entire process of setting up a wholesale channel for a small business here

By understanding how wholesale works, where to wholesale products, and how to calculate the right prices, you can confidently enter the wholesale market and expand your e-commerce business.

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