Avoid These 7 Wholesale Business Mistakes
The wholesale business has a lot of pitfalls, if not aware of, can catch a business off-guard and result in costly mistakes. As with all businesses, there are inherent risks in the wholesale business. However, the magnitude of the risks is amplified considering the distribution of wholesale products and raw materials in large quantities to wholesale buyers at smaller margins.
There are a lot of moving parts when it comes to the wholesale business and you have to be mindful of the health of the business while striving to improve the business at the same time. Just like driving a high-speed car, a momentary distraction can be fatal for the business. Knowing the key metrics that drive your wholesale business forward at all times is critical to ensuring that you continue to stay and flourish in the wholesale industry.
You can have a highly successful wholesale business if you properly manage your business. With the understanding that wholesale business can be highly rewarding and at the same time not a good choice for the unorganized, you must stay away from these 7 mistakes as a wholesale seller.
Mistake #1 Not Using an Inventory Management System
Relying on manual entry of orders with pen and paper, or digital entry on a spreadsheet or PDF will not be helpful in the long run. As more and more orders start coming in, you will quickly realize the need to go through a large database to find specific orders for referencing purposes. You will also arrive at a point where you have to segregate your order list of customers to better target them with interesting deals and offers.
All of this relies on having a robust inventory management system in place. When you equip your team with a strong inventory management system, the whole process of recordkeeping becomes a breeze that you do not have to constantly worry about tracking purchases and records of buyers. Choose an inventory management software that best suits your needs to manage your wholesale business. Depending on the size of your business and your budget, you can pick from a strong selection of various solutions.
Mistake #2 Playing the ‘Lowest Price’ Game
It may be tempting to lower your price to gain new customers. However, remember that playing the ‘Lowest Price’ game is simply a race to the bottom. You end up trying to compete with other sellers with better price margins and losing a lot of profits in the process. Instead of focusing on playing the price game, focus on delivering value to your customers. Your buyers are looking for a reliable seller for products they are looking to buy. You can be that seller.
Focus on adding value through your services to the buyer to gain repeat customers. You will soon realize that by pricing your products lower and lower, you attract the wrong audience looking for the cheapest deal and not caring about business relationships. Try fostering a wonderful relationship with your buyers by offering high-quality products at competitive prices while adding value to them through exceptional customer service.
Mistake #3 Ignoring the Power of Online B2B Sales
It is a sad reality that the wholesale industry is still years behind the retail industry in terms of having an active online presence.
As wholesalers, by offering your products online with upfront discounts and detailed descriptions, customers are able to get all the information at a moment’s notice without the need for sales representatives to explain all the benefits of your products over a phone. As we move into a more digital age, it serves your best interest to explore the power of online B2B sales to improve your business and expand your customer base.
Mistake #4 Not Adapting to Changing Market Trends and Preferences
No matter the market you’re in, you have to realize that it is constantly evolving. There are new trends in the making all the time and customer preferences are constantly changing. When you are not aware of the latest trends in your industry and fail to keep up with the new trends, you tend to get left behind.
Understand that getting left behind is dangerous in any business. You do not have to be the last person to realize that your products that were in high demand and selling out fast are not desired as much anymore.
Be active on social media and see what your buyers are interested in. More than that, if your buyers are retailers that sell to customers, observe the change in tastes and preferences of the customers to adapt yourself. There have been many examples of previously successful wholesale businesses failing to adapt to new trends that eventually led to them getting behind and never catching up.
Do not be one of those businesses that don’t pay attention to the needs of the end consumers. You have to be active and know the latest trends and tastes of the buyers you’re serving to do well in the wholesale business.
Mistake #5 Order Fulfillment Inefficiencies
When you take a lot of time to clear customer orders, the chances of you receiving fresh orders from previous customers reduces dramatically. As a wholesale seller, the efficiency of your order fulfillment will earn repeat customers who enjoy doing business with you. Buyers, no matter who they are, love getting their orders delivered as soon as possible.
Take the example of Amazon.
By introducing Amazon Prime with same-day and 1-day delivery, the retail e-commerce giant was able to garner a lot of attention and scoop up a lot of customers from other online platforms. People want their orders delivered fast. There is an inherent joy in receiving packages by mail. So, don’t keep your customers waiting with long delays due to a slow fulfillment process.
Improve your fulfillment process by identifying and eliminating obstacles. Every single day you save for your customer will dramatically boost your chances of getting more orders in the future. Usually, a lot of fulfillment inefficiencies arise due to no control over your inventories. Here again, inventory management software will come to your aid.
You can identify what items to stock, in how much quantity, and in which location. You may want to stock the fastest-selling goods at a stock location ideal for quick packaging and shipping to the destination. By streamlining your inventories and reducing the inefficiencies in the process, you will greatly improve your perception as a reliable wholesale seller in the eyes of your buyers.
Mistake #6 Not Targeting Your Customers
The assumption that all your customers are the same and hence a generic offering will interest them all is a fallacy. Your buyers have different needs and combining them all together to assume that their needs will be the same will be a hindrance in scaling your wholesale business. One of the best ways to scale your business is to identify different customer needs and segment customers based on their needs.
If you have recorded information of all your customers and their purchases, the task of segmenting them will be easier. Once you’ve segmented your customers, you will come to realize that you have more opportunities to focus on the segments that bring more business to you.
You can spot patterns, understand preferences, and tailor your business towards more efficiency and increased revenue. For example, if you’re in the clothing wholesale business and spot that your biggest buyers have in the last 3 months purchased a lot of striped cotton shirts, you may begin to explore if there is a trend you may be missing.
If you find that there is a renewed interest in striped cotton shirts, you can add more varieties to your offering and thus increase your sales and your revenue as the trend continues. It is important to segment and target your customers. If you’re not targeting your customers, your missing huge opportunities to scale your wholesale business.
Mistake #7 Not Paying Attention to the Bottom-line
When you’re not paying attention to the earnings of your business, you’re missing the whole point of running a successful wholesale business. Yes, it is important to bring new products to the market for buyers. And, yes, it is important to introduce new processes to better serve your customers.
But, all of this should eventually be tied back to the net earnings of your business. Keep your eye on the cash flow of your business and know where your incomes and expenses are coming from.
Chances are that you may be running faster to stay in the same place. You may be burning more money and not bringing in any new customers. Make it a practice to review your cash flows regularly to know if you’re improving the bottom line of your business. If you’re doing more, but are not seeing the results in an improved bottom line, then you have to analyze the shortcomings and come up with solutions.
A successful wholesale business is one where you continue to bring new offerings to your buyers, increase your customer base, and add more revenue to your business.
It may be difficult to balance the act of running a wholesale business without making mistakes. Trust us, we have seen a lot of businesses make a lot of mistakes and the most common ones are the ones we’ve discussed here.
If you’re only aware of these mistakes and ensure your business does not make them or at the very least understand these are the common pitfalls, you will save a lot of time and resources not having to pick yourself up after a fall and having to go again.