How to Buy Wholesale?
Are you considering the idea of wholesale sourcing? Make sure to do your homework before making any major purchases. There's a lot to consider here. A wholesale strategy is grounded in data analysis and understanding of market trends. Start by studying bestselling products on other online marketplaces (Amazon has a hugely helpful best sellers page). Then examine sales data from your store and your competitors, look at global and industry-specific market trends, and narrow down the scope of potential products to source.
It might not sound like the most fun, but you'll be happy you did it when the sales start rolling in.
Another consideration? The operational and logistical challenges that come with buying products wholesale. We highly recommend sorting this one out before you buy anything in bulk. Wholesale sourcing is very different from its newer dropshipping counterpart in that the retailer is responsible for storing and managing inventory once stock is purchased.
In other words, if you buy 3,000 dog chew toys for your organic pet supply store, then you'd best have a secure location to store 3,000 dog chew toys.
Wholesale sourcing dodges the biggest dropshipping bullet in that it allows a retailer to retain control over packaging, shipping, branding, and logistics. For unique or niche brands, all of those elements of product delivery can make or break their sales numbers.
After some preliminary research and storage considerations, you have to talk about price. Think carefully about how you price your products. The idea is to "buy low and sell high," right? Whatever product you're putting on your shelves should be priced well and aligned with broader market trends, but also suit your unique business operation and profit margin. There are a few different kinds of pricing strategies.
There are no rules about how to mark up and resell your wholesale products. You have total freedom and flexibility to play with the numbers and modify your sales tactics to maximize profit. Wholesale products will often come with an MSRP, which is the manufacturer suggested retail price, though many e-commerce platforms don't use this price when reselling.
Some other pricing strategies include bundling certain goods together, pricing above or below the competition, and keystone pricing, which is when a retailer doubles the cost of the wholesale product (unsurprisingly, this is not a super popular method). Plenty of retailers have found success in using the loss-lead pricing strategy, where you discount certain products to get consumers in the door and then keep high markups and cushy profit margins for other complementary or compelling products. Another idea to consider is anchor pricing, which is when you show a consumer that a discount has been applied by displaying both the original and reduced price. A bargain is always compelling for shoppers.
If you own a preexisting retail brand, then you need to tailor your wholesale product addition to the niche and target demographic you've cultivated for yourself. If you're starting from a blank slate and just beginning the development of a brand, you can take your wholesale strategy to whatever industry you'd like. Whatever pricing model you use and adapt through your store should be conducive to the kind of products you're selling, though.
If you're starting from scratch, consider operating in an industry with high markup percentages. Jewelry, clothing, and alcoholic beverages all have the potential for high resale value. In contrast, hardware stores don't have the same kind of flexibility or potential for increased profit margins. There's only so much you can charge for nails and screws, and there won't be that big of a difference with the wholesale vendors that you work with, meaning less profit margins.
