Wholesaler and Value Addition

The number of people who are looking for a reliable wholesaler to be their business partner is increasing day by day. However, it is shocking to see how few of them actually know what a wholesaler actually is and meant to do. How many of us have even thought about the question, why do wholesalers even exist, before we start looking into a dropshippers directory to find one? Knowing what they are supposed to do will tell us what to look out for while selecting them.

Breaking Bulk Efficiently: Making the product is one thing and getting it to the market is another. Let’s say that, if tomorrow, the manufacturer were to decide that they want to sell to the retailers on their own, would they be able to cut costs? No, in fact, they will end up paying much more. This is because the type of infrastructure that is required to ship the products to the market is huge. A wholesaler maintains warehouses, administrative staff, inbound and outbound logistics and faces the threat of theft, and so on. Now, because these guys do it in bulk and are specialists in doing so, they are more effective and save the company money by breaking bulk before it reaches the consumer.

Financing the Transactions: Now, you may have noticed that there is a lot of infrastructure involved. This infrastructure means that the wholesaler has to put in a lot of money on behalf of the company. Thus, the manufacturer is saved the capital investment. They can invest their money in what they do best, manufacturing operations. Also, the wholesaler will pay the company for the sales after a predefined period. Let’s say at the end of two months, the wholesaler pays the company for all the goods it got possession of. The final sale may happen after four months. Thus, the company has instant cash flow instead of waiting for the sale to happen. The wholesaler effectively finances the manufacturer interest free.

Bearing the Risks: There are also a lot of risks involved in the wholesale business. One such is the risk of obsolescence. Let’s say, a wholesaler of clothing does not manage to dispose off the clothing in a given time period. In due course, the trend changes, and the clothing may become unsellable unless discounted heavily. The wholesaler has to bear the brunt in this case as well. Nowadays, though, wholesalers have started demanding that their prices be lowered or the risk be shared.

A good wholesaler therefore has good infrastructure, provides you with financing, and shares your risks. Keep this in mind the next time you search.

Other Sources - Liquidation Wholesalers