Many people are of the view that wholesale business is a very friendly business which gives you good bucks in few deals. Yes, I don t deny this fact but these profits are an outcome of good investment in terms of heavy finances as well as hard work and dedication. But unfortunately not many people talk about it. If you are a wholesaler, you know well that getting into this business is not a piece of cake.
Many newbie wholesalers are thrown out of the market because they think starting a wholesale business is an easy job. Sometimes they are unable to plan appropriately and sometimes they make fatal mistakes which end up their career in this business right away. Following pointers show which factors make this kind of business a hard piece of cake to swallow:Wholesale business needs a lot of capital for the arrangement of offices, warehouse, purchase of goods, distribution of goods, taxes, insurance, utility bills and many other small and large upfront investment which makes the entire seed capital very large. You purchase goods in bulk from the suppliers and buying in bulk requires heavy capital to be purchased.
This is true that you earn good in this business, but you cannot just do that in a day or two. It is because retailers mostly buy goods on credit basis and they probably won t be able to make the payment for first 30 days of receipt of order. What if meanwhile, that retailer becomes insolvent, or goes out of the business due to any reason? What if you select wrong products? Or what if you buy wholesale products and later come to know that these products will not sell due to poor quality? A big financial loss!
If wholesalers are not successful in maintaining good contacts with their suppliers and customers, they are very near to the failure. If you have worked out well on the relationship management with your suppliers, they will provide you goods at dirt cheap price which you can sell ahead at good rates. But relationships are an outcome of trust which is built over time.
You stick to your wholesale suppliers, pay them on time and work as a business partner with them over many years and then you can expect loyalty in return. Also, you distribute products and samples free of the cost to your customers, provide high quality to them, sort out their complaints and satisfy them with respect to price and generate a loyal customer base. All this needs good time and investment.
Due to flexible nature of business and promising future returns, many wholesalers are penetrating in the wholesale industry. This has made this industry saturated and because of intense competition, newbie wholesalers have to spend huge amounts to stay competitive in this field. When they plan to get into this business, they conduct strict back ground checks on their competitors and research them thoroughly which raises their competition costs. But this cost is an ongoing cost. To stay ahead of your competitors and prevent your customers from going to them requires a pretty constant investment.