Growing competition, market disruptors, and the use of new technology have all made the wholesale business more challenging. A lower profit margin also means that your workflow isn't as good as it could be because you aren't taking into account the current challenges in the wholesale business. But what are the biggest problems for businesses as a whole, and what can wholesalers do to mitigate risk and overcome challenges?
1. Mismanagement of stock
Inventory management is one of the hardest things for a wholesaler to do. It's a never-ending cycle that starts with getting products, storing them, and then selling them in bulk to retailers. Most businesses have a supply chain with two extreme ends: not enough product and too much product. When you don't have enough of a product, you can't meet customer demand an risk losing customers. Further to this, the cost of upkeep goes up when there are too many items on hand. In fact, this will be a cost that keeps coming up if the stock stays in the warehouse for a long period of time.
To counter this, you need to categorise your product into old, fast, and slow products. in order to understand how it moves and how much of it to hold. You can also streamline delivery and watch carefully how it's transported and handled. Also ensure you understand your minimum order quantity (MOQ). When making a product that costs more to make, suppliers set a minimum order quantity. As a wholesaler, it's hard to deal with these kinds of items.
2. Take responsibility for your goods
A wholesaler is a middleman between the company that makes the product and the stores that sell it. The products are not made by the wholesalers themselves. But a wholesaler has to make sure that the products don't lose their quality on the way from the warehouse to the retailers. Make sure you have backup plans in case any products that aren't working make it to the stores. Avoid things like rough roads that might come up when you're traveling. Make sure you don't mess up how you manage your storage. Most of the time, when retailers get bad products, they blame the wholesaler. So, as a wholesaler, make sure you don't hurt your reputation by sending out products that aren't up to par.
3. Measure productivity
Wholesale business owners sometimes don't look at how much a product makes them money. There may be some costs that are hard to see. For example, the cost of hiring people to move inventory, storing it, delivering it, and moving. These are all costs that need to be factored in. So, keep track of these hidden costs to find out how much a product really makes. Compare the cost of making the product with the selling price to accurately see how profitable it is.
4. Take care of damage to property
Property damage is something that wholesalers often have to deal with. The following things could cause damage to property: Earthquakes, fire, load shedding or heavy rain. These unplanned events can cause damage to the wholesaler's stock in a matter of seconds. In order to ensure damage is minimised, make sure an insurance and contingency plan is in place so you know what to do in case of an emergency.
5. Ensure that supply and demand match up
For many business owners, the fact that there aren't enough goods to meet demand has been a constant problem. In the supply chain process, the client gives the wholesaler an order, which the wholesaler then sends to the supplier. Then the supplier confirms when the goods will be sent. The supplier sends the goods to the wholesaler, who then sends them to the customers. But the process gets complicated when a customer needs a set of goods right away and the wholesaler can't get them to the customer in time. This occurs when the supplier requires a certain amount of time before sending goods to the wholesaler. So, this mismatch leads to either too many products or not enough. This can be rectified in a number of ways like backordering, tracking inventory more effectively, and better managing suppliers.
6. Helping your business grow
Every business wants to grow quickly. One of the biggest problems in the wholesale business is that it grows slowly because there aren't enough connections and business growth. So, in order to grow in the wholesale market, there are some things you can do. Consider reaching out to more customers instead of only working with a few select retailers. Diversify the types of contacts your work with and make connections both in your own area and around the world with e-commerce. Email marketing is another great way to get the word out about your products.
The bottom line
To run a successful wholesale business, you need time, money, and an easy way to place orders. To stand out from the other wholesale businesses, you need to find smarter ways to deal with the problems that are holding you back. Cast a wider net and find innovative ways to grow your channels, measure productivity, and safeguard your stock holding. Remember that with a cash advance you can also make smart decisions to grow your wholesale business in real time, Contact Merchant Capital to understand how.