Starting Out a Wholesale Business

Published: 10th October 2008
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A wholesale distribution business... Many have tried, and yet many have failed. Wholesale distribution business is not as easy as a retail business as anyone would've thought it would. It's quite different from a simple retail business. The difference between a wholesale distribution business from a retail business is that retailing involves simply buying your stock to sell to consumers or customers, whereas wholesale distribution business deals with getting their stock from manufacturer itself, restocking it, then sells it to their dealers or retailers or other wholesale distribution business.



In a wholesale distribution business, you are considered as the middleman, as the manufacturer's distributor, hence having the name wholesale distributor business. Though some manufacturers have their own dealers, some are still using distributors such as a wholesale distributor to distribute their products. This process works like this: let's say a clothing line is manufactured and packaged then sold to clothing store owners through retail shops. Now in between that process is where the wholesale distributor is, distributing the stock of clothing lines to its network of dealers and other wholesale distributors. This process makes it a lot easier for the product to be distributed widely.



To put it simply, as the owner of a wholesale distributorship business, you will be charged with the overlooking and management of goods from manufacturer to dealers. As the wholesale distributor, you will be buying goods to sell at a profit, much like a retailer would. The only difference is that you'll be working in a business-to-business realm by selling to retail companies and other wholesale firms like your own, and not to the buying public.



Starting "It" Out



Now for entrepreneurs looking to start their own wholesale distributorship business, there are basically three way of starting this business, start from scratch or buy into a business opportunity, each having their own advantages and disadvantages.



Buying an existing business can have its positives. Buying a business would let you tap into the seller's knowledge bank, and you may even inherit his or her existing client base, which could prove extremely valuable. The downside of this is that it can be costly and may even be risky, depending on the level of success and reputation of the distributorship you want to buy.



Business opportunities are also a good option because it has support, training and quick success if the originating company has already proven itself to be profitable, reputable and durable. The only thing is this option is the most risky, as all business opportunities must be thoroughly explored before any money or precious time is invested.



Starting from scratch can also be costly, but it allows for a true "make or break it yourself" scenario that is guaranteed not to be preceded by an existing owner's reputation. The only thing that breaks this is that you will be building a reputation from scratch, which means lots of sales and marketing for at least the first two years or until your client base is large enough to reach critical mass.



For a wholesale clothing business, Seven Wholesale can provide the necessary clothing needs that every business would have. Visit Seven Wholesale at www.sevenwholesale.com to learn about their wholesale clothing collections.



Business Operations



Before embarking on this escapade, one must firstly know the different operations involved in a wholesale distribution business. The flow of operation in a wholesale distribution process is very simple. The flow starts with the manufacturer manufacturing or producing the goods or products, then delivers the goods to the distributors, then with the distributor's network of dealers the distributor distributes the goods to their dealers, which will then fall to the dealers or retailers whom deals with the product getting to its target customers.



As a wholesale distributor, your position on that supply chain will involve matching up the manufacturer and customer by obtaining quality products at a reasonable price and then selling them to the companies that need them.



Distribution means the purchase of a product or products from a source (such as a manufacturer, or other wholesale distributor), and selling it to your customer. As a wholesale distributor, you'll be charged in specializing in selling to your clients such as vendors, retailers, dealers, and other wholesale distributors, who are in the business of selling to end users which are the consumers.



Operation Costs



Operation or operating costs are the costs that a distributor will make before and after the grand opening of the wholesale distribution business. The cost of a business depends on the business itself. If the distributor is trying to set up a wholesale clothing shop in his or her house and using their basement as a store house, then it'll cost less than trying to set up shop in an industrial part with an extensive set of store houses.



But regardless of what type of wholesale distributorship business it would be, there are still some basic operating costs that a distributor has to pay. Necessities such as office spaces, a telephone, fax machine, and some set of personal computers are part of the core of this business. So this'll mean an office rent if the distributor isn't working on his/her house, a telephone bill, and an ISP bill for your internet purposes.



Storage is another thing. Distributors who work in their own home doesn't need to own or rent a store house or storage because they have their own basements to serve as a store house. But distributors who have an office must own or rent their own store houses or storage spaces. Renting a separate office space and a store house is very costly so some distributors chose to set up their offices on their store houses instead so they can combine both on one bill.



For a wholesale clothing business, Seven Wholesale can provide the necessary clothing needs that every business would have. Visit Seven Wholesale at www.sevenwholesale.com to learn about their wholesale clothing collections.



Business Routine



Owners of a wholesale distributorship business are asked to perform certain tasks to manage and maintain their businesses a lot properly. A wholesale distributor must perform sales and marketing, accounting, shipping and receiving, and customer service functions on a daily basis. They are also asked to handle tasks like contacting existing and prospective customers, processing orders, supporting customers who need help with problems that may crop up, and doing market research.



This is a lot of workload. Many distributors fail in their wholesale distributorship businesses because of their lack of management skills to manage these tasks. To handle this kind of tasks, some distributors are now applying technologies such as software tools that tackle such functions as inventory control, shipping and receiving, accounting, client management, and bar-coding to manage their day to day business processes or routines. Technology has will make every distributor's lives much, much easier.



The Customers



Every business counts on their pool of customers and clients to achieve their success, so the next logical step in the startup process involves defining exactly who will be included in that pool. Defining this part is important to know what the distributor is trying to target and form strategies on how to approach them. By defining this, it could answer the question "why am I in this business?"



As the wholesale distributor, you'll have several choices oh which customer or client you want to target. This includes retail businesses, retail distributors, exporters, and other wholesale distributors.



Retail businesses, such as what I told you before, are the ones that deal with the end part of a business cycle, the consumers. This includes establishments like grocery stores, independent retail stores, large department stores and power retailers.



Retail distributors are those businesses who sell to other retailers. Retail distributors are perfect if a distributor can't get in on some major or power retailers.



Exporters are companies that collect goods and ship them overseas.



Aside from manufacturers, wholesale distributors also look into other wholesale distributors about the goods that they needed. It's always best to buy from the source, but that isn't always possible, due to exclusive contracts and issues like one-time needs. For this reason, wholesale distributors often find themselves selling to other distributors.



For a wholesale clothing business, Seven Wholesale can provide the necessary clothing needs that every business would have. Visit Seven Wholesale at www.sevenwholesale.com to learn about their wholesale clothing collections.




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