How does wholesale work?
Wholesaling is the act of selling your products in bulk to another retailer, usually at a discount, who then sells the product to its customers at a higher price. It’s important to note that creating a wholesale channel for your online business does still allow you to sell your product to the end consumer.
As a wholesaler, you can sell to both consumers and other retailers. You don’t have to choose one or the other.
The first examples of wholesale businesses that might come to mind are probably large brick-and-mortar department stores, like Walmart or Target. Wholesale is, after all, often thought of as an old-fashioned business model that’s being disrupted by newer direct-to-consumer ecommerce businesses.
“One of the myths about wholesale ecommerce is that you need loads of cash to get started. While you do need some startup money to break into the wholesale market, there are ways to scale your growth. For example, reorganize your existing space to make room for your bulk products rather than renting a new storage space right off the bat. And don’t forget to negotiate with your suppliers—they tend to be more flexible when you’re making a large order.”——Simon Slade, founder of SaleHoo
However, in more recent years, wholesale has experienced a revolution of its own due to online selling sites like Amazon, Wish, and Wayfair. While ecommerce lets direct-to-consumer brands thrive by lowering the barrier to setting up shop, wholesale still offers consumers a convenient shopping experience where they can find everything they need in one place.
Is selling wholesale worth it?
This newer version of wholesaling, which often takes place in online marketplaces or through smaller boutiques, has advantages that attract direct-to-consumer brands, too. Here are three reasons why opening up a wholesale channel might benefit your business.
1. Increase sales without increasing marketing spend
As a direct-to-consumer brand, a large amount of your budget needs to be allocated to marketing in order to grow. For every new customer acquired, there is often a cost, after all.
The most common myth is that B2B customers won’t shop online, so there’s limited growth potential. In truth, B2B ecommerce is experiencing massive growth and drives much higher revenue than B2C ecommerce.Shane Barker, digital marketing consultant
By selling your products wholesale, another business shoulders the cost of customer acquisition while you reinvest your time and money into other areas of your business.
2. Leverage other brands’ audiences to sell your product
Just as acquiring new customers costs money, building a loyal audience of fans and customers is not an easy feat. By creating a wholesale partnership with an established brand that has already made a name for itself within your niche, you can leverage the company’s goodwill to get your product into customers’ hands.
3. Enter new markets with less risk
Expanding your business to a new country or territory comes with a series of associated costs, like warehousing and logistics. You might also have to start from scratch, marketing to a population that hasn’t heard of you.
Finding another retailer with an existing presence and supply chain in a new market can reduce the risk of international expansion by cutting your setup costs.
Ultimately, a wholesale business model benefits both the retailer and the wholesaler by creating efficiencies. The retailer gets a new—often complementary—product to sell without investing in research and development, and the wholesaler saves money on marketing by gaining direct access to an existing customer base.
Best wholesale products to sell
There is a large annual market for education supplies. In the United States alone, there were more than 50.7 million K–12 students, 26 million students enrolled in college/higher education institutions, and more than 3.2 million teachers employed in public schools in 2020.
Below are some education products to consider wholesaling:
- Arts and crafts supplies
- Educational software
- Writing utensils
According to Statista, 76% of US homeowners made at least one home improvement in 2020 during the pandemic. Home décor is a solid market for the wholesaling business.
Some home décor products to consider wholesaling are:
- Frames/wall art
- Candles and candle holders
- Throw pillows and blankets
- Storage and organization
Clothing and accessories
Whether it’s clothes for work, day-to-day, or special occasions, everyone needs to wear something. That’s why fashion is a large and ever-growing market. In 2021, the accessory market alone made $94 billion in revenue in the US.
Some popular product types to consider are:
Every human on this planet needs food, and will continue to need food for the rest of their lives. So this is an obvious category to wholesale, as the demand will always be there.
Below are some food products to consider wholesaling:
- Ice cream
- Oils and shortening
- Fresh produce
- Keto products
Purses and handbags
About $2.77 billion worth of women’s handbags were imported into the US in 2020. Don’t be fooled by the specificity of the category—this is a huge market.
Below are some types of purses and handbags to consider selling wholesale:
- Men’s bags
- Kids’ bags
There are well over one hundred cooking shows available to watch right now, not including spin-offs or syndicated shows. That means cooking, and what you use to cook with, have become purchases that more and more people have taken an interest in. Wholesaling kitchen materials is a business with the potential to last you a long time.
Below are some kitchen products to get your wholesaling business off the ground:
- Table linens
Health and wellness
Here are some health and wellness products that do well in this product category:
- Vitamins and supplements
- Anti-aging creams
- Skin care regimens
- Fitness apparel
- Yoga accessories
- Organic beauty products
US homes spent an average of $860 in 2020 on each pet in the home. It’s clear that getting into the pet supplies wholesale business is profitable. Here are some products to consider:
- Health care
- Cleaning supplies
- Clothing and accessories
- Leashes, collars, and harnesses
- Crates, cages, and aquariums
Despite the pandemic’s global grip in 2021, the party planning market still reached $3 billion. Wholesaling party supplies not only gives you a variety of products to sell, it gives you volume as well. Plus, the market doesn’t seem to be going anywhere.
Here are some products to consider in this category:
- Party favors
- Disposable tableware
- Banquet equipment
How to sell wholesale products
Now that you have your wholesale pricing strategy figured out and a wholesale channel set up in your store, it’s time to search for prospective wholesale customers. But where do you find these retailers, and how can you increase sales?
Join a wholesale marketplace
Retailers today can find and order products from wholesale marketplaces. Aside from selling wholesale to retailers in your own ecommerce store, you can also join a popular marketplace to build brand awareness and reach new buyers.
Do research on prospective marketplaces to make sure they’re the right fit. You want the marketplace to easily integrate with your store.
Use your direct-to-consumer website
Oftentimes, a retail customer will actually find you first. If you’ve had success with direct-to-consumer advertising, you’ve possibly already received messages from distributors who want to carry your product online or in their physical stores.
When you are advertising to consumers online, you are also reaching other business owners who might be interested in carrying your product. This is why it’s important to keep a link in your website footer for wholesale inquiries: so anyone browsing your website can easily contact you about potential opportunities.
Start selling wholesale today
The rise of ecommerce has allowed direct-to-consumer brands to launch faster and grow digitally. As a result, many had written off selling wholesale items as a fading retail trend. However, a new wave of wholesale startups are actually thriving in the era of ecommerce by rethinking the way wholesale works.
Both direct-to-consumer brands looking for new sales channels and entrepreneurs who want to save on marketing spend are opening wholesale businesses. With the right pricing strategy and a little know-how, you can start opening your business up to new revenue-generating partnerships and see your product flourish among complementary brands.
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