If you are planning on selling products either online or in stores, you will want to familiarize yourself with the process of wholesale. Here are 5 things you should know about retail and wholesale:
Know the basic difference between retail and wholesale.
Simply, retail means that you, as a product manufacturer, sell your product directly to your customers. Wholesale generally means you would sell your product in bulk quantities to a middle man, who then sells it to consumers.
Understand the basic cost differences between wholesale and retail.
A product sold through retail is generally priced at a higher rate per unit than wholesale is. Why? Because wholesalers sell products in bulk, so they purchase your product at a discount and figure out their own retail price on their own when they distribute to stores.
Wholesale can be more stable financially than retail.
Selling your products to wholesalers can open up different revenue areas that would be too difficult for just one person (you!) to handle. This, in result, could give you more stability, because the pressure is now on the wholesale buyer, not on you personally. Also, wholesaling in general comes with fewer expenses, especially since you don’t have to buy or rent a store front, spend money on marketing in store, and all the other retail overheads that are required of selling your own products.
Wholesale can be boring.
Wholesaling means that a lot of your time will be spent with logistics such as getting your product to a certain place, managing manufacturing, and keeping track of inventory. You will be interacting more with other business people, and not so much with the public. If you are a very creative person who enjoys marketing and interacting with customers, then wholesale might not be for you.
You can participate in both wholesale and retail.
It’s possible to sell your products retail, and also sell them wholesale to resellers — a hybrid version. This would be the best of both worlds for some — you can interact directly with your customers and also see your products sold by other retailers, reaching a wider audience. But competing with your own resellers could also mean it’s cutting into your own profits, since the reseller can easily sell your product for less than you can with all of your overhead expenses.
Closing:
It’s important to understand the basics of wholesale, and whether it suits your product and your personality before embarking on it as a way to sell your product or service.