Running a wholesale business is not easy. There are many challenges to be faced, from disintermediation, fast changing trends and customer demands, to the emergence of new technologies. Instead of increasing profits, many wholesalers fail when trying to beat those challenges. This is because there are various mistakes in their business processes that they often fail to notice. In this article we’ve put together six common wholesale mistakes that you need to avoid.
1. Making unnecessary, excessive purchases
You may be deliberately buying a lot of stuff because you are worried about stock shortages or expecting discounts from your suppliers. However, buying large quantities of goods without predicting customer demands and trends will only hurt your wholesale business.
If you can’t sell all your items quickly, then you’ll have to keep them longer. This can allow for contamination, decay, and damage that ultimately lead to waste. Avoid those possibilities by doing forecasting methods.
Forecasting is useful to help you place orders in the right amount and time, thus avoiding excessive inventory. In addition to predicting customer demands and trends, you also need to monitor your inventory levels on a regular basis to find out how many items should be ordered. Another effective way you can implement is to make blanket orders so you can place orders over a period of time.
2. Not negotiating with suppliers
Another mistake that is often made by wholesalers is forgetting to negotiate with suppliers. Manufacturers usually offer large minimum order quantities. However, if this is burdening you, then you should try to negotiate.
There are also other things you can negotiate, such as the price of goods, terms of payment, shipping costs, or even product packaging. Negotiating with suppliers can help you reduce operating costs as well as increase profit margins.
3. Inefficiencies in order fulfillment processes
- Your buyers are also required to meet their customers’ demands. Thus, they want to have their items delivered faster. You should be able to facilitate that, so your buyers won’t ever leave you for other wholesalers or distributors. Moreover, there are many retailers who choose to buy directly from manufacturers.
In order to avoid disintermediation, you have to optimize your order fulfillment process. Here are a few suggestions to do it:
Reduce lead time or the amount of time passes between the placement of an order and delivery
- Don’t set too high minimums so you won’t scare away your potential buyers
- Make it easy for buyers to place orders by allowing them to buy and pay online
4. Not following up after a sale
Remember that you used to pitch your products to the retail stores you were targeting so heavily? You often call and mail them to get them buy your products. How about now, do you still regularly contact them?
Following up after a sale is very important to make your buyers keep coming back to you. This strategy shows your concern to your customers. Ask them how sales are going or if you can help with anything through a personalized email. We suggest you to do this soon after your goods reach the buyer and frequently keep in touch with them.
5. Focusing on price rather than service
Times have changed. Competing on price used to be quite effective, but now it’s no longer beneficial. Customers tend to perceive that lower prices indicate poor quality. Lowering prices also keeps your business from being profitable.
Instead of lowering your prices, you better focus on improving your service. You can improve your customer experience, for example by bringing the convenience of online shopping to them through your website or social media.
6. Performing all the wholesale operations manually
Competition in the wholesale industry is getting higher. You have to find a way to outperform your competitors. That will be hard to do if you are still performing your business activities the old-fashioned way.
Doing repetitive tasks manually takes a lot of time and effort, thus keeping your business away from efficiency. In addition, today’s buyers are also looking for sellers that are able to fulfill orders more quickly. That can be achieved if you use an automated solution such as an ERP system. It lets you automate your business operations such as inventory monitoring, reordering, shipment tracking, invoicing, financial reporting, and a lot more.
To have a better understanding about the ERP system, read the following article: