Wholesale distribution refers to a business which is run by a wholesale distributor, that buys products in bulk from manufacturers and then sells them on to retailers. The primary function of wholesale distribution is to buy products that are in high demand in large quantities and for a low price. To remain ahead of the game, wholesale distributors need to have several skills and focus areas. These six things will make you money and grow your wholesale distribution business.
1. Create a strong credit policy
Not only is it essential to set up a fair credit policy for a wholesale distribution business, but it's also essential to stick to it. Whenever possible, try not to give customers too much credit and don't allow them to pay late, as this will leave you overexposed. Ensure your payment terms and credit limits are firm. Ensure you are clear and thorough when setting up and negotiating your terms, and remember to do a thorough check on credit references for new customers. Every six months, review your customers' accounts and make sure they are following your terms and conditions.
2. Keep an eye on cash flow
If you didn't know how to handle your cash flow well, it would be too hard for you to run the business in the first place. You need to keep track of every penny you make and spend and set up a plan for paying your bills on time. It's just as important to keep track of and be careful with your receivables to make sure you get paid on time. Learn how your business is doing financially so you can then decide where the best place is to invest and when to reorder goods.
3. Watch your stock
Keeping just enough goods on hand is the first step to strong inventory management. Even though it's your job to sell a lot of your products, it's never a good idea to have too much stock on hand. This is expensive, risky and difficult to track. If you have a good inventory management system, it will be much easier to keep track of all of your orders across channels. So you can then decide how to manage and move your product efficiently.
4. B2B e-commerce
B2B e-commerce is growing at a rate that has never been seen before. Over the years, every type of retail sub-sector has seen a huge rise in e-commerce. And the wholesale business is no exception, with new buyers who go to the website of their wholesale distributor to transact. This is because B2B customers like how easy it is to do business online. More specifically, B2B customers like secure transactions, where there is a digital trail and where they can easily browse and buy products. This, in turn, drives sales.
5. No more hand-written systems
Even though we live in the digital age, too many wholesale distributors still take orders on old-fashioned clipboards and paper order forms. Some have chosen to use technology by using PDF order forms and Excel spreadsheets. But these tweaked ways are actually just as cumbersome as paper and are holding you back. With the development of technology, more and more successful businesses are using mobile order writing. This gives sales staff quick access to all their customer information, product lists, and an interface for writing orders directly onto their devices.
6. Compete on customer interaction
As a wholesale distributor, you can offer great deals on products, which will make your offer more profitable. But in today's highly competitive market, competing on price alone can be risky for your business, and it won't take long for another company to come along with a better discount offer. So, instead of lowering your prices to compete, focus on customer service and ensuring your customers are happy. Make an extra effort to keep track of and write down your order history, and send your customers regular reminders to get them to buy from you again.
The bottom line
Running a successful wholesale distribution business requires a focused vision and strong systems. These six areas will take your wholesale distribution business from 'mom and pop' to 'serious player' in no time at all. And remember, if you need quick access to working capital, contact Merchant Capital and start growing your wholesale distribution business in the next 48 hours.