How To Increase Sales In Wholesale Distribution

how to increase sales in wholesale distribution

Whether you are just thinking about it or have decided that you would like to start a wholesale business, there are some things you need to spend a lot of time designing and researching before you can go all out. Proper planning and finding facts in advance can not only save you a lot of headaches in the first place, but it can also mean the difference between a successful wholesale business over a monetary disaster waiting to happen.

In this article we will give you ten tips to help you get started planning your business. They are presented in chronological order so that you can use them as a way to plan the appropriate steps along the way. success depends on many factors – and the most important factor is your determination and energy you put into making your business a success!



Step 1: Ask yourself why?


Why do you want to get into the wholesale business? Is it because you would like to work with other companies and manufacturers as the main point of contact between the two? Or is it because you think it’s an easy way to make money fast?


Wholesale is a demanding business and can require a lot of capital skills, storage, logistics design and customer service. As the main channel between the manufacturer and retailers, you may find yourself facing hundreds of thousands of units of goods that need to be shipped across the country right away. Large retailers often pay with Net-10 or Net-30, which means that payment is made after delivery of the goods. What would you do if a retailer did not pay or went bankrupt before you received the payment?


Step 2: Study your competition


It is not good to enter a market where there are already established, reliable wholesalers for a given product. Retailers want to know that they have a reliable source of supply that meets their requirements and will often not change wholesalers for a standard product. Just because you build a warehouse doesn’t mean they will come.


Use the local Chamber of Commerce, the Internet and even visit retailers to find out who the wholesalers are in your area. If you want to specialize in a particular product, contact the manufacturer directly to find out who handles wholesale trade for them already in your area. There may be no one in your state or there may be three on the street.


Step 3: Evaluate your financial situation


Wholesale can require a lot of initial capital and expense before you can even see a percentage of your income. Do you have the resources to spend to build a relationship with a manufacturer that will probably require you to buy huge amounts of them? Can you wait up to 30 days for payment? Do you have the money to invest in the shipment of goods or to create your own delivery service?


Be sure to exceed the starting cost as well. Employees, taxes, real estate rentals and insurance are just some of the things to keep in mind.


Step 4: The business plan


A consistent business plan is the foundation of any business. You need to make sure that you state what you intend to do and how you intend to do it. Not only will banks demand it for funding, but often other businesses you deal with will want to see it as well. It should be the guidelines you follow every day in your business to achieve the goals you have set.


For this part, it is often wise to work with a business attorney or seek professional advice from a consulting firm. A good resource that will help you find people in your area with the necessary skills and background is Small Business Administration, which is located on the Website at


Step 5: Apply for licenses, tax certificates and other necessary documents


Nothing is as certain as death and taxes. It is no different in business, with one exception. As a wholesaler, you will be required to pay taxes and other fees to your state and federal government.


The only exception is that you will receive a tax-free status for the actual goods you move between the manufacturer and other retailers. This can be a difficult process and is addressed at the state level.


Again, for this part you will want to make extensive use of your state tax authority as well as local chambers of commerce. A mistake here can cost you not only money, but most likely your entire business.


Step 6: Create your facilities


Location, location, location. Businesses must exist somewhere and like most things in life, there are rules and regulations about where they can be. Will you have semi-trailers coming to your location at all hours of the day and night? Will you have a shop window for sellers and customers to come? What about the needs for electricity, water and sewage?


There are laws for location to ensure that the right structures end up in the right places. No one wants a warehouse next to them in a residential neighborhood. Work with commercial real estate agencies to find a suitable place for your business.


Step 7: Create your relationships

You have the facilities, you have the finances – now do you have someone to supply you with a product or customers for this product? Work with manufacturers and retailers to build a relationship. This can be one of the most difficult parts of the experience, and it’s where the rubber hits the road.


In moreover, relationships extend beyond your customers and suppliers. It is a good practice to establish relationships with the local Chamber of Commerce, retail associations and work organizations in your area.


Step 8: Marketing


Wholesalers traditionally do not advertise. Doesn’t that mean you shouldn’t market your business to others, after all, how can you build relationships or expand existing ones? Wholesale drivers are published and distributed to many retailers and most of the marketing efforts will be directed here. The other half should go on to retailers, meet with buyers and describe your services. Just because you have a customer today doesn’t mean you can rest on your laurels.


Marketing works by building a relationship and maintaining it.


Step 9: The machine on the go: Serve your customers


The product comes in, the retailers place orders – are we all done right? Not exactly. Taking the product to your customers, answering questions about delivery schedules, working with suppliers to acquire new product lines, is a complex and demanding part of the business.


In today’s marketing model “just in time”, a delay in shipping could mean the end of a business relationship. You need to inform your customers about any changes in the situation, concerns about prices and product transfers from your installation at the loading dock. This is where backend systems come into play while keeping records and log files of all activities with this customer. Don’t underestimate the value of a good customer relationship management (CRM) system.


Step 10: Employees, accounts receivable and other financial matters


Once everything starts, your next focus is on your business finances. Employees must be hired and fired. Salary must be met. Money must come in and money must come out. Here you have to invest in financial talents and services if you don’t already have them.


An oversight can mean losing hundreds of thousands of dollars. A lost payroll could mean that your entire business stops. It is important to keep track of your books and expenses. Find out when to tighten the belt and find out when to expand.

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