The Importance of Quantity Discounts When Buying or Selling Wholesale
Wholesale is an integral part of the retail industry. It is an important component of a company’s revenue and profitability, as well as a key driver of growth. In order to be successful in wholesale, companies need to understand what their costs are and how they can reduce them. One way to do this is by negotiating with manufacturers, distributors and other wholesale suppliers for quantity discounts. The importance of quantity discounts in wholesale cannot be underestimated – it can lead to substantial cost savings for companies with high volume deals. Consequently, it’s not surprising that a significant proportion (34%) of wholesale deals are based on quantity.
What Is A Quantity Discount?
Quantity discounts are a way for sellers to incentivize larger purchases from buyers who actually want to buy in bulk. Wholesale sellers who have sold on retail websites where there is usually no option for setting up quantity discounts, often by habit sell to wholesale buyers without any discounts. By enabling quantity discounts, wholesale sellers incentivize those who want to buy wholesale products in larger quantities to save money in the process.
Importance of Quantity Discounts When Selling Wholesale
Buyers are constantly looking for better deals in wholesale purchases. They want cheaper prices for larger quantities of products they are looking to buy.
By offering bulk discounts on a wide range of products, sellers can maximize their profits while saving money for buyers. Since successful wholesale selling is all about sales in bulk quantities, the larger sales you make, the more profitable your business is going to be. Of the many strategies that can induce larger purchases, quantity-based discounts are one of the tried and tested ones.
How Quantity Discounts in Wholesale Selling Works
To understand how quantity discounts in wholesale selling works, let us take a simple example of a wholesale seller of men’s boots. Since the wholesale buyer purchases boots from manufacturers in bulk (large quantities), he gets a good discount on the price of boots. He can sell the wholesale purchase to buyers who buy wholesale for resale at attractive prices.
For example, the wholesale seller can offer a discount of 10 percent to buyers who purchase 100 pairs of men’s boots. The discount can be 15 percent for buyers who purchase 250 pairs of men’s boots. It’s always best to buy in bulk for resale.
How to Buy Wholesale for Resale
If the buyer is a person who is looking to buy wholesale for resale, he/she may have a lot of buyers for men’s boots and would be happy to make larger purchases for bigger discounts. By showing upfront discounts, those who are looking at buying wholesale items for discounts are happy to add more products to the cart to avail bigger discounts at checkout, which will increase their profit margin when selling it retail.
As buyers who want to buy wholesale for resale, you will likely have established trade partnerships with smaller buyers or own retail stores for directly selling to customers. The whole cycle of wholesale buying and selling results in lower and lower prices. Because when sellers place large orders from manufacturers, manufacturers can in turn source raw materials in bulk quantities at cheap prices. Lower manufacturing cost leads to lower wholesale cost which means good discounts for wholesale buyers.
Advantages of Quantity Discounts in Wholesale Buying and Selling
- Improved profit margins for wholesale buyers and sellers
- Incentives to buy more products at better prices
- Cost to manufacture goods becomes cheaper
In order to be successful at buying wholesale and reselling the merchandise for a healthy profit or selling wholesale to resellers, you need to use the concept of quantity discounts.
Buy in bulk for resale and increase your profit margins. Sell in bulk to reduce materials cost and keep your wholesale buyers happy.