If you’re already running a wholesale business, then you already know how hard it is to manage orders, customers, and shipments along with everything else that comes with running an online e-commerce website.
To give our readers a clearer perspective, there are different types of wholesale businesses.
TYPES OF WHOLESALE BUSINESSES
Before we categorize wholesale businesses into their types, let’s be clear that some wholesalers do their business with complete freedom, while others are associated with one or multiple producers. There are three main categories in the wholesale trade.
– Merchant Wholesalers
Merchant wholesalers are the largest single group of wholesalers, approximately 50% of all wholesaling. Merchant wholesalers include two significant types: Full-service wholesalers & limited-service wholesalers.
Merchant wholesalers do not manufacture their products, but they have in-depth knowledge of products to know when is the right time to start selling them to retail businesses in different industries. If there is any loss between the buying and selling of the product, it must be balanced out by the merchant wholesaler.
– Brokers & Agents Wholesalers
Brokers and agent wholesalers usually don’t possess the goods they are selling; most of the time, they are the bridge between a wholesale operator and their customers. A broker negotiates a good deal between the two parties and works off a sales commission structure.
The difference between a broker and an agent is that a Broker is for short-term contracts like just a couple of orders while the agent works for the long term and specializes in the repeated purchase.
– Sales & Distribution
When a manufacturer hires people to represent them to wholesalers actively. That representative creates distribution channels and has a proactive approach in sales and negotiations.
THE CONCEPT OF MINIMUMS IN WHOLESALE BUSINESS
The wholesale business gives you an edge where you can set your minimums (Minimum amount of Quantity) to sell it to the purchaser. The purpose of minimum order quantities is to allow suppliers to increase their profits while getting rid of more inventory more quickly and weeding out the “bargain shoppers” simultaneously. It is cruel and capitalistic, but it is a fact of business if you want to grow volume, revenue, and ultimately profits.
TOP 3 REASONS TO APPLY MINIMUMS IN WHOLESALE BUSINESS
1. To Remain Profitable:
For a considerable profit margin, you might need to sell products in large quantities. That is if you want to break even selling goods at a low cost. With a Minimum Order Quantity rule in place, you can trim out the right customers from bargain hunters. Thus, you can focus your efforts on the more profitable customers who see enough value in your goods to purchase them in larger quantities.
2. Increase in Inventory Turnover
If you have to manufacture your finished goods, your wholesale business might be channeling raw materials and parts from other suppliers at a specific minimum order quantity. For a healthy inventory turnover, your business might have to sell your products at a certain minimum order quantity to justify the cost of buying raw materials. If the products do not get sold quickly, they might spoil or expire, resulting in lost revenue.
3. Made-To-Order Goods
Your wholesale strategy may also be operating on a made-to-order business model where you produce products based on clients’ demand instead of keeping warehouse stock. For production to generate sufficient profits, your business can only start production if there is a justifying order quantity.
Thus, a minimum order quantity helps to ensure that there is an acceptable demand for your products to start production.
DO YOU KNOW WHOLESALE FOR WOOCOMMERCE PLUGIN CAN HELP YOU TO SET YOUR MINIMUM FOR AN ONLINE STORE?
Wholesale for Woocommerce Plugin (The Most Powerful & Complete Wholesale Solution For Your WooCommerce Store) gives you a splendid feature for MOQ; You can allow wholesale prices and checkout to only those wholesale customers that have reached a minimum quantity of orders in their cart.
