Benefits of Wholesale Business: Why It’s a Game-Changer for Online Stores

Selling products in bulk to other retailers at a low price is known as wholesaling. After wholesaling, retailers sell the product at a higher price. It is important to note that having a wholesale channel for your eCommerce business doesn’t mean you can’t also sell directly to consumers. One of the key benefits of wholesale business is that it allows you to engage in both B2B and B2C transactions.

A common misconception about wholesale eCommerce is that it requires a huge upfront investment. While some initial capital is necessary to enter the wholesale market, there are effective strategies to help expand your business. In fact, wholesaling is a massive industry, with monthly sales in the United States reaching $670.88 billion in December 2023 alone. This showcases the significant benefits of wholesalers tapping into a lucrative market. In this article, we’ll dive into the benefits of wholesale business and how it can drive success for your eCommerce store.

What is the Benefits of Wholesale Business?

Wholesalers can sell their items at a lower price because they buy in bulk, which cuts down on processing time and costs. They normally deliver large amounts of items, although they can also accept smaller orders. The wholesaler can be the manufacturer or producer, but this is not always necessary.

Selling your e-commerce items at a wholesale price is beneficial for two types of customers.

Consumers who buy in bulk save money on per-unit costs, as well as business owners who buy in bulk and resell it to consumers at a higher price. According to Digital Commerce 360, conversion rates for B2B online transactions range from 6% to 8%, while conversion rates for B2C online purchases are now only 3% to 5%.

Wholesaling allows a company to reach a wider consumer market in terms of geographic regions and customer purchasing power while maintaining a healthy cash flow. The benefits of wholesale business extend beyond market reach, as they also help in maintaining a stable cash flow and reducing operational costs. Companies that use B2B wholesale Bulk order applications get many advantages that are specific to their industry. The benefits of wholesaling can be associated with several factors.

1. Increasing sales without increasing the marketing budget
2. Building Brand Value by Boosting Customers’ Lifetime Value
3. It Boosts Your Credibility
4. Reduce Your Store’s Total Operating Costs
5. Creating your own brand

Benefit 1- Increase Sales Without Increasing the Marketing Budget

It is too expensive and difficult for a particular brand to sell directly to its end customers without going through a retailer, distributor, wholesaler, or other outlets.

But, when you sell your products wholesale, another company covers the cost of customer acquisition, allowing you to focus on other aspects of your business.

If you face any obstacles, then connecting with people who speak your language will help you overcome any wholesale pricing obstacles. However most small producers find that their surrounding geographic region is insufficient to gather customers.

So, in this case, smaller manufacturers must have a way to build a market in which they can grab potential clients to sell their goods, and they must ensure that the quality of their goods is up to the mark.
Because wholesalers’ purpose is to connect to a larger market base without making a huge marketing budget.

Benefit 2- Building Brand Value by Boosting Customers’ Lifetime Value

Customer lifetime value refers to the amount of income that is produced by a single customer over the time they transact with your business. The more time a customer spends with your company, the more profit you will gain.

One of the most significant benefits of selling at a wholesale price is the opportunity to develop a strong business relationship with customers. If you provide the same service and facility to your customers, they will become repetitive. The entire process is beneficial for developing a distinct brand value for your product.

To increase a customer’s lifetime value ensure that your customer care and service are exceptional. According to a survey, 61% of shoppers have stopped doing business with a brand because of their poor customer service.

Personalize your communication by using chatbot pop-ups, for example. Be honest about pricing, company information, and product listings; make it simple in the case of reordering.

Benefit 3- It Boosts Your Credibility

To run a successful wholesale business, grabbing customers’ attention and gaining trust are important. If you do that perfectly then you can understand the benefits of wholesale business.

According to the Australian Competition and Consumer Commission, over $8 million was lost in 2020 due to internet shopping fraud. In the United Kingdom, there were 10,000 more reports of online shopping and auction fraud in 2020 than in 2019.

This data shows the significance of trustworthiness in eCommerce businesses, such as if you have a store on Shopify.

Adding reliable retailers to the consumer base of your wholesale business boosts your credibility. When prospects and buyers see your brand’s potential, then they will purchase it and will believe your company is legitimate.

Benefit 4- Reduce Your Store’s Total Operating Costs

One of the lesser-known benefits of wholesale business is its ability to drastically cut operational expenses, thanks to reduced marketing and distribution costs. A successful businessman knows how to reduce costs and generate more revenue. Applying wholesale pricing to your eCommerce store encourages repeat purchases, and customer retention will dramatically reduce your overhead costs.

Addressing retailers at wholesale pricing reduces your marketing costs by moving that cost to the retailer. You only need to think about selling the goods in bulk to the store; they may focus on finding customers on their own.

In the meantime, this will save you time and money and in that time you can focus on other aspects of your e-commerce business. Selling in bulk at a wholesale price also lowers the expenses. This is one of the benefits of wholesaler partnerships. It allows you to streamline operations and maintain higher margins, even with lower individual product prices.

Benefit 5- Creating Your Brand

The products are frequently marketed under the wholesaler’s own umbrella when they are distributed wholesale. By selling your products at a discount, you can attract strong collaborations with renowned brands in your area. This provides you with immediate access to an existing consumer base.

When all of your products are sold in different retailers’ stores, which can be online or offline, your brand becomes popular. Furthermore, as clients see your product in various stores, they will form their impressions of your brand. And eventually, this will result in organic traffic for your e-commerce business.

To further boost sales, consider offering seasonal discounts like Valentine’s Day discounts, especially if your products align with seasonal gifting trends. Limited-time promotions can attract bulk buyers looking for special deals.

Moreover, if you are wholesaling a product with multiple variants at the Shopify store, then integrate a bulk order application to give your customers an easy bulk order experience. Implementing tiered discount strategies can also encourage larger purchases, as buyers get better pricing when they buy in higher quantities.

After having a good experience, a customer will evaluate your brand value. Because, rather than buying from a single store with a limited selection, customers choose to browse through stores that have a wide range of products.

Wholesaling is beneficial for the buyer because:

• It delivers a sufficient number of goods for resale by consumers.
• This allows for more geographical access and a greater variety of items to be obtained.
• Maintaining and improving product quality to increase sales
• Increasing cost-effectiveness by lowering the number of manufacturer interactions.
• It promotes easy access to a supply of products.
• Organizing appropriate products for sale
• Reduce buyer shipping expenses by selling bulk quantities of products.
• Supporting suppliers to understand and appreciate buyer consumption patterns

Challenges of Wholesale Business

The size of the global wholesale market is predicted to increase from $42.12 trillion in 2021 to $46.37 trillion in 2022. However, despite these growing opportunities, understanding the benefits of wholesale business relationships and managing challenges like inventory is key to navigating the wholesale business successfully.

1. Inventory storage and overstocking
2. Limited visibility of sales forecasting
3. Demands of customers and suppliers clash
4. Keeping cash flow and profit margins stable
5. Steady growth rate

Challenges#1 Inventory Storage and Overstocking

Many wholesalers find it difficult to stock the proper amount of product. As a wholesaler, if you overstock goods, it will increase your expenses. On the other hand, understocking goods can be a cause of missing sales. So, you have to monitor all the pick and choice processes.

Challenges#2 Limited Visibility of Sales Forecasting

To have a better understanding of product profitability, you must first track the costs of products sold. Business owners sometimes make mistakes in gathering information about how profitable their items are.
Whenever you are looking at the profitability of your product, give attention to inventory cost, space, and employee inventory management.

Challenges#3 Demands of Customers and Suppliers Clash

For many business owners, a mismatch in consumer and supplier expectations is related to market demand and they evaluate it as a challenge.

The supply chain process begins by receiving an order from a client and placing it with your supplier. They then confirm the delivery date with you, and you may then deliver the products to your customer.

This may appear to be a simple process, but it is quite complicated, which can cause a conflict in the process. For example, if a customer needs a set of products urgently and you do not have them, you will ask your supplier to provide them for you. And, it will take the supplier a few days to provide it.

Challenges#4 Maintaining Cash Flow and Profit Margin

Cash flow is important for a wholesaler’s business. Positive cash flow makes it easy to manage your business efficiently, pay your expenses, meet consumer needs, and invest in the future growth of the company.

A wholesale business can meet extra inventory costs, late payments, and new orders at an unexpected time. In these cases, your wholesale business can face challenges in fulfilling these criteria.

To reduce these types of problems, keep your online payment method up-to-date keep track of your forex profit or loss, and associate it with specific vendors.

Challenges#5 Steady Growth Rate

The expansion of the company and relationships is one of the primary obstacles to a wholesale business. Expand your business internationally and create a social media identity.

Bottom Line

To conclude, the wholesale business is profitable because it saves lots of time and effort. A wholesaler can sell a single item or a wide range of products. The primary goal of this type of company is to distribute goods. “Ultimately, the benefits of wholesale business offer an excellent way to scale efficiently. The benefits of wholesaler partnerships help reduce overhead costs and boost long-term profitability.”

Benefits of Wholesale Business FAQ