For those new to the world of wholesaling, it can be a confusing and challenging process. The goal of this blog post is to help you navigate through the ins and outs so that you have a better understanding of how to market your products as a wholesale supplier. We will cover what a wholesale company is, ten wholesale industry trends, wholesale marketing challenges, and critical wholesale marketing strategies and services.
What is a Wholesale Company?
In the world of retail marketing goods, a wholesaler is a company that resells products to retailers. In the wholesale industry, wholesalers, also known as distributors, work on behalf of manufacturers and supply products directly from the factory or warehouse. The relationship between a manufacturer and distributor can be either exclusive or non-exclusive. Exclusive means they have a single distributor per area. Non-Exclusive means multiple distributors are supplying similar products in an area. A distributor may sell to any retailer given it meets all of their terms and conditions for doing so, including price, quantity, and quality control guidelines. A good example of this is a consumer electronics store. In this case, the wholesaler would supply an electronics manufacturer with their product which they resell to the retail store at a small mark up.
Today’s wholesale industry is growing at an accelerated pace as more manufacturers are selling directly to retailers or other distributors. As retail sales continue to shift online, there is more demand for less expensive goods sold for competitive prices. This has made it even easier for consumers to find cheap goods, and businesses looking to resell them have flooded the Internet searching for wholesale suppliers.
Wholesale Industry Trends
Wholesalers face numerous challenges every day, including competition, adapting to new technologies, and staying ahead of the latest trends within the industry. Below are the ten wholesale industry trends.
1. Brick-and-Mortar Stores Exiting
Brick-and-Mortar stores are beginning to close their doors at an accelerated pace. This is common in the retail industry as they continue to compete with online marketing strategies. The most impacted by these store closings are fashion retailers who rely on high volume, low margin sales that can be made online.
Electrolux, for example, closed four distribution centers in the US and Canada which were responsible for $1 million dollars of product shipments per year. They also announced restructuring plans involving laying off 900 employees worldwide, including 500 within the US and Canada, only two days before this announcement.
Most recently, Brookstone announced it would be closing its flagship location on 5th Ave New York City and several other locations around the country.
2. More Provenance
Over the past couple of years, we have seen more and more wholesalers building out their websites with a plethora of information. They include all the necessary information that consumers look for, such as product specifications, product images, third-party certifications of compliance, and terms of sale. The goal is to give potential retailers all the information they need within one website without having to go elsewhere searching for it. They want customers to search and find them! There is no better way than through provenance.
3. Two or Three-Tier Model
Some wholesalers prefer a two-tier model where they handle all aspects of marketing and selling, while others enjoy outsourcing wholesale marketing initiatives via 3rd parties. Wholesalers realize that having full control of their marketing data and using it to its fullest potential is the most profitable model. Getting involved with 3rd party manufacturers has helped wholesalers acquire new customers, increase productivity, decrease costs and stay top of mind regarding marketing initiatives.
4. Private Label Manufacturers
Private label manufacturing is becoming more popular amongst sellers who want total control over branding, inventory management, and ownership of wholesale websites. This makes sense because these sellers would need to do all of this on their own otherwise. Private label manufacturers allow wholesalers to have a small budget and manage it effectively through product design, inventory management, and marketing strategies.
5. More Technology
Technology will play an important role in the future of wholesale distributors. This means that wholesalers will need to develop sites based around mobile devices and ongoing website improvements through internal efforts or outside assistance like 3rd party support. Wholesale websites will need to be search engine optimized (SEO), including integrations with social media platforms like Facebook, Twitter, and Pinterest, which also require ongoing maintenance using 3rd party tools like Hootsuite. Companies should invest time in managing SEO themselves to ensure that they have the data needed for these 3rd party tools to be most effective.
6. Increased Demand
The number of eCommerce wholesale suppliers will continue to grow as this industry continues to grow and more sellers join. This means that there is a demand for more wholesalers and new strategies on how they can stand out from their competitors. We will see an increase in SEO efforts, mobile-enabled websites, and improved user experience, which all play into customers purchasing decisions.
7. New Retail
There is no denying that online marketplaces like Amazon, Alibaba, and others play a major role in driving sales for both retailers and suppliers alike. We are seeing an increasing trend where many manufacturers ‘white label’ or sell their products on these marketplaces to drive sales for their wholesale customers. This means that wholesalers need to sell through multiple channels to capitalize on all available opportunities they have for driving new business.
Dropshilling is becoming a popular option for wholesale distributors because of the benefits that are provided. Several platforms offer drop shipping services, including Oberlo, Doba, and Dropified. Wholesalers are looking to build their brands through marketplaces like Amazon, eBay, Walmart, etc… where they can represent themselves as suppliers but outsource product fulfillment and order processing. This allows them to focus on marketing and managing wholesale customers while thoughtfully considering how much inventory they need to keep in stock.
9. Niche Market Opportunities
Many wholesalers are shifting their focus to niche markets in order to compete in this increasingly competitive industry. Niche market resellers will have an advantage over larger companies in terms of pricing, customer service, and product sourcing. This is because the competition in wholesale markets tends to be lower when focusing on a limited selection of products, allowing for better margins.
10. Digital Media
Digital marketing continues to play a major role in online marketing efforts across all industries, including wholesaling. We’ve noticed many wholesalers emphasize organic search engine optimization (SEO) and pay-per-click (PPC) ads like Facebook Ads. This is because it allows online business owners to focus on managing top-of-funnel opportunities like customer acquisition and not as much effort on product fulfillment or working with 3rd party suppliers.
Wholesale marketing challenges
1. Product Management
This is the process of identifying, selecting, and forecasting wholesaling products that you will sell through your eCommerce site(s). The success of your business depends on how well you can identify the right products to stock and sell. Skipping all these necessary steps early on in your wholesale career could lead to failure if not done correctly, so it’s best to learn from experts in this area like SkuVault or DigitalCommerce360. These platforms and tools will help save time and money when scaling a successful online retail business.
2. Product Sourcing
This is when suppliers take orders through their eCommerce website(s) for goods they don’t have in stock yet since they will create and ship them on-demand once a customer places an order.
3. Product Sourcing Strategy
There are several ways to find products you can sell through your eCommerce business. You can purchase them directly from the manufacturer, search 3rd party marketplaces like Alibaba, or you could start by sourcing products online and hope that they will eventually convert.
4. Shipping Arrangements
This is the process of choosing which shipping carrier(s) will be used when fulfilling orders placed by customers on your eCommerce website(s). Logistics are an important part of any eCommerce business, so keep in mind how fast you need to get your product(s) out the door and if your customers want them shipped internationally. Don’t forget to consider products like electronic gadgets, cosmetics, etc., which often require special handling for shipment.
5. Order Processing
Once a customer places an order on your eCommerce website, you will need to process it through your wholesaling business and ensure that the product is eventually sent to the buyer. Here are some common ways buyers can pay for their orders: credit card, PayPal, and Apple Pay online digital wallet.
Wholesale Marketing Strategies and Services
1. Direct Marketing
Wholesalers are discovering new ways to target customers through direct marketing, whether via email, mobile, text, or even good old-fashioned snail mail.
2. Email Marketing
This is a form of direct marketing where wholesalers send emails with special offers directly to your customer base through an email service provider like AWeber, GetResponse, Mailchimp, Constant Contact, etc. These servers allow you to manage your email lists more effectively, like who subscribes and unsubscribes, etc.
Wholesalers can’t ignore the power of social media advertising today since that’s where most of their customers spend their time online.
4. Content Marketing
This is a form of marketing where wholesalers create content that’s specifically designed to attract people to their eCommerce website(s). These types of blog posts, infographics, and videos will help increase traffic and conversions on your site and turn more customers into repeat buyers.
5. Pay Per Click advertising
This is another form of internet marketing that allows you to pay service providers like Google or Facebook so they can display your advertisement on their search result pages or even within the news feed section on Facebook for free! Just remember this is an auction-based model, so if you want to be successful with PPC ads, it’s important to launch a winning ad campaign with proper tracking links and conversion goals.