4 answers
jimear
Student
Wilmington, North Carolina
1
Question
Updated
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what to do in wholesale?
i want a better understanding of wholesale and how it works and continues to thrive and make people wealthy. i want to know the pro's and con's of it all.
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4 answers
Douglas Ray, CMR, AMR
Sales, consulting, and marketing
52
Answers
Marietta, Georgia
Updated
Douglas’s Answer
Wholesale often refers to the process of buying large quantities of items, which are then split into smaller amounts and sold at retail price. Let's use a bottle of soda (like Coke or Pepsi) as an example to help clarify this for you. The soda manufacturer sells their products wholesale to distributors in large quantities, often by the truckload. The distributor then stores these products in their warehouse until they receive orders from retail customers, such as grocery stores.
So, how much does the wholesale distributor earn? Let's say the cost for them is 25 cents per bottle, and a pallet can hold 1,000 bottles. This means the distributor pays the manufacturer $250 for each pallet full of sodas. The distributor then sells each bottle to a retail grocery store like Walmart for 50 cents. The grocery store then sells these sodas individually at a retail price of $1.50 each.
One advantage of a wholesale business is that they don't have to deal with the costs and requirements of selling directly to the end user or the retail customer. However, a disadvantage is that some retailers might create their own version of the same product to compete with brand-name products. This could potentially decrease the demand for the products the wholesaler deals with. I hope this explanation helps you understand better. Cheers!
So, how much does the wholesale distributor earn? Let's say the cost for them is 25 cents per bottle, and a pallet can hold 1,000 bottles. This means the distributor pays the manufacturer $250 for each pallet full of sodas. The distributor then sells each bottle to a retail grocery store like Walmart for 50 cents. The grocery store then sells these sodas individually at a retail price of $1.50 each.
One advantage of a wholesale business is that they don't have to deal with the costs and requirements of selling directly to the end user or the retail customer. However, a disadvantage is that some retailers might create their own version of the same product to compete with brand-name products. This could potentially decrease the demand for the products the wholesaler deals with. I hope this explanation helps you understand better. Cheers!
Carlotta Rickert
11
Answers
Updated
Carlotta’s Answer
Hi Jimear,
Think of wholesale as selling to the middle man (distributor) who then sells to the end user (consumer or business). When the wholesaler sells a complex product, think of technology like an AI service, the wholesaler needs to understand their product but they also need to understand how the middle man (distributor) is going to package and resell that product to the end user (consumer or business). It's just requires another layer of understanding since there are technically 3 people in the sales process now. Hope this helps!
Think of wholesale as selling to the middle man (distributor) who then sells to the end user (consumer or business). When the wholesaler sells a complex product, think of technology like an AI service, the wholesaler needs to understand their product but they also need to understand how the middle man (distributor) is going to package and resell that product to the end user (consumer or business). It's just requires another layer of understanding since there are technically 3 people in the sales process now. Hope this helps!
James Constantine Frangos
Consultant Dietitian & Software Developer since 1972 => Nutrition Education => Health & Longevity => Self-Actualization.
6338
Answers
Gold Coast, Queensland, Australia
Updated
James Constantine’s Answer
DEAR JIMEAR,
Exploring Wholesale:
Wholesale is a business strategy where products are purchased in bulk directly from manufacturers or distributors at a lower cost, then sold to retailers or other businesses at a higher rate. This allows wholesalers to profit by selling products in large quantities to retailers, who then offer them to customers.
Unpacking Wholesale:
Product Sourcing: Wholesalers get their goods straight from manufacturers or distributors, typically buying in large volumes to take advantage of lower per-unit prices.
Storage: Wholesalers usually have warehouses to hold the products before they're sold to retailers. This aids in effective inventory management and order processing.
Sales Outlets: Wholesalers distribute their products in large quantities to retailers, who then sell them to individual customers through various outlets such as brick-and-mortar stores, online platforms, or direct sales.
Pricing Tactics: Wholesale prices are generally lower than retail prices, enabling retailers to increase the price of the products and earn a profit when selling to customers.
Relationships: Establishing robust relationships with manufacturers, distributors, and retailers is key for a successful wholesale business. Good relationships can result in better deals and long-lasting partnerships.
Advantages of Wholesale:
Scale Economies: Buying in large quantities allows wholesalers to enjoy economies of scale, reducing the cost per unit and boosting profit margins.
Profit Margins: Wholesalers can make substantial profits by selling products at a higher price than what they paid, particularly with high-demand items.
Market Penetration: Wholesale enables businesses to reach a broader market by providing products to multiple retailers across various regions or sectors.
Drawbacks of Wholesale:
Significant Initial Investment: Launching a wholesale business necessitates a considerable initial investment in inventory, storage, and logistics.
Competition: The wholesale sector can be fiercely competitive, with numerous participants competing for the same manufacturers and retail customers.
Inventory Control: Managing inventory levels and accurately forecasting demand can be difficult, potentially leading to overstock or stock shortages.
Wholesale vs. Dropshipping:
While wholesale requires buying and storing inventory before selling it in bulk, dropshipping is a method where the retailer doesn't hold the products in stock but instead forwards customer orders and shipping details to either the manufacturer or another retailer who then ships the goods directly to the customer.
Top 3 Credible Sources Used:
Harvard Business Review: Delivers insights into business tactics, including wholesale operations and distribution models.
Forbes: Provides expert commentary on industry trends and success stories related to wholesale businesses.
Investopedia: A trusted resource for financial information explaining concepts like wholesaling, distribution, and inventory management in depth.
GOD BLESS YOU JIMEAR!
JC.
Exploring Wholesale:
Wholesale is a business strategy where products are purchased in bulk directly from manufacturers or distributors at a lower cost, then sold to retailers or other businesses at a higher rate. This allows wholesalers to profit by selling products in large quantities to retailers, who then offer them to customers.
Unpacking Wholesale:
Product Sourcing: Wholesalers get their goods straight from manufacturers or distributors, typically buying in large volumes to take advantage of lower per-unit prices.
Storage: Wholesalers usually have warehouses to hold the products before they're sold to retailers. This aids in effective inventory management and order processing.
Sales Outlets: Wholesalers distribute their products in large quantities to retailers, who then sell them to individual customers through various outlets such as brick-and-mortar stores, online platforms, or direct sales.
Pricing Tactics: Wholesale prices are generally lower than retail prices, enabling retailers to increase the price of the products and earn a profit when selling to customers.
Relationships: Establishing robust relationships with manufacturers, distributors, and retailers is key for a successful wholesale business. Good relationships can result in better deals and long-lasting partnerships.
Advantages of Wholesale:
Scale Economies: Buying in large quantities allows wholesalers to enjoy economies of scale, reducing the cost per unit and boosting profit margins.
Profit Margins: Wholesalers can make substantial profits by selling products at a higher price than what they paid, particularly with high-demand items.
Market Penetration: Wholesale enables businesses to reach a broader market by providing products to multiple retailers across various regions or sectors.
Drawbacks of Wholesale:
Significant Initial Investment: Launching a wholesale business necessitates a considerable initial investment in inventory, storage, and logistics.
Competition: The wholesale sector can be fiercely competitive, with numerous participants competing for the same manufacturers and retail customers.
Inventory Control: Managing inventory levels and accurately forecasting demand can be difficult, potentially leading to overstock or stock shortages.
Wholesale vs. Dropshipping:
While wholesale requires buying and storing inventory before selling it in bulk, dropshipping is a method where the retailer doesn't hold the products in stock but instead forwards customer orders and shipping details to either the manufacturer or another retailer who then ships the goods directly to the customer.
Top 3 Credible Sources Used:
Harvard Business Review: Delivers insights into business tactics, including wholesale operations and distribution models.
Forbes: Provides expert commentary on industry trends and success stories related to wholesale businesses.
Investopedia: A trusted resource for financial information explaining concepts like wholesaling, distribution, and inventory management in depth.
GOD BLESS YOU JIMEAR!
JC.
Beatrice Acosta
Channel Management Ops & Enablement
1
Answer
Miami, Florida
Updated
Beatrice’s Answer
Wholesale sales is an entirely different style of selling. You are building long term relationships and if you learn what your clients specialty is, you can help them be very profitable which in turn will make you/your business profitable. Never make a sale, just to make a sale. What I mean by that is, make sure it is the right deal for your client and that they wont get stuck with the products to the point where they are in the red. Be sure to keep ethics top of mind when dealing with your clients. But if this is done right, yes, there is a ton of money to be made!