Breaking even in wholesale is difficult for businesses competing in today’s economy. Businesses are generally competing neck and neck across various industries and sectors, whether it’s in the primary, secondary or tertiary sector. Technology has progressed to offer large corporations with the resources and a massive competitive edge over smaller businesses, while simultaneously empowering smaller businesses to expand operations.
It’s hard to determine exactly what the formula for success is, because it all varies greatly. One thing that’ certain, however, is that there’s no single thing that helps one business succeed over others. It’s usually a combination of different things like strategic business decisions, technology, effective marketing and communications and the industry they’re in.
It’s necessary that you focus on the things that will truly drive your wholesale business to success.
1. Build a niche for yourself
Building a niche is what will set you apart from your competitors. If you’re able to offer something not everyone has, whether it’s a specific product or an added service, you’re more likely to retain clients and attract new ones over others. Having a niche means you deal with less competition and can sell at incredibly profitable rates. Clients whose services depend on yours will be less likely to take their business elsewhere because it can affect their quality as well.
As a wholesale business, you might not realise the value of having a niche, until you’re left asking yourself why a client would choose you over a supermarket giant who’ll offer them far more competitive rates. Learn more about finding a niche here.
2. Deciding your target clientele
Especially smaller retail businesses that lack formal structure and scale and can’t connect with wholesalers and distributors or buy in bulk—what about them? There are several markets out there that await you, but you can’t possibly serve all of them.
For instance, you have clients that need kosher or halal meat only, but others who require exotic meats, making it difficult to cater to all of them. In this case, it might be in your best interest to decide whether you plan to focus on the majority and branch out, or put your eggs in one basket for a hefty profit.
It’s also important to understand the way different retail clients function, their services, unique selling points and the current market trends. Knowing this information will give you the edge you’re looking for and decide the market you want to serve.
Create a profile for your ideal customer; this can depend on the type of business they run, the geographic location of their services, the specific industry they serve and more. Wholesalers are B2B suppliers whose clientele tends to be more focused and smaller than retailers; don’t work to make everyone a supply chain partner, focus on the right ones.
3. Maintaining a positive cash flow
Maintaining a positive and regular cash flow means not running on credit and debt, or continue lending to clients. In business it’s inevitable to have some amount of credit, with clients, with suppliers, with other parties that you deal with. However, it leads to trouble if you can’t pay off your loans, rent, utility bills or for fuel, petty costs because you’re only running on credit.
Monitor your costs and expenditures carefully. Don’t spend recklessly without doing a thorough cost-benefit analysis. Don’t make upfront purchases and payments that you can streamline in a smoother way. Start with basics and necessities before moving onto bigger investments. You don’t need a fancy office to run a wholesale business, but you do need a wholesale food distribution and order management system like OrderTron.
Try to clear your dues on time and don’t let late penalties and overcharge weigh you down. When it comes to clients, don’t extend the payment schedule extensively. Charge late fees or settle on a manageable timeline for your receivables. In fact, OrderTron can be used to maintain your cash flow as well by reducing data entry and tracking expenses and dues that you’re owed.
4. Finding the perfect price points
Speaking of payments, it’s also important that you find the right price points for your product or service. Too low and you run the risk of losses; too high and you risk driving clients away.
The standard pricing point is twice the cost price, because you know retailers will also mark it up. It can be complicated to calculate and figure out what the right pricing is, but it’s well worth investing time and effort into the process. Having a niche product or service can help you charge a higher price point.
It depends on your clients and the industries you’re catering to, since you might also sell products directly to consumers. For instance, if you provide wine to restaurants and food businesses across Perth, it could benefit you to offer products to consumers as well. In this case, having dual pricing can lead to greater profit.
Offering discounts, special rates and pricing is another strategy that many wholesalers working with regular clients use. Seasonal discounts, holiday specials, etc. targeted at specific customers allows you to tweak the pricing without changing it across the board. You can do this through OrderTron too, by sharing special rates with specific clients and not the rest.
5. Establishing terms of exchange with retailers
Some businesses might require you to deal with several managers, or different agents. Others that are smaller in scale and lack a structured hierarchy might have you dealing with the business owners directly. It varies across organisations and business types.
Establish your terms with these businesses by understanding their models, identifying the correct people to communicate with and process orders accordingly. While some businesses might require large volumes of produce, others may lack the storage capacity and business volume to match that.
This might also affect the frequency of your orders, because a perishable product has a shorter shelf-life and would require smaller batches sent on a regular schedule, while more long-lasting products may not.
Determine how this varies across customers and get into the flow of it. It can be hard to keep track of but fortunately OrderTron will also schedule your orders and process them as per routine.
6. Keep marketing to the end consumer
As a wholesaler, you don’t want to neglect market trends and consumer demands, even if consumers are at the end of the supply chain. You’re not just targeting retailers. If your retail customers don’t see a value in your product because consumers don’t want it, they won’t be keen on stocking it.
If consumers are pushing for eco-friendly produce or organic foods, it might be in your interest to orient your marketing strategy towards that. Projecting your brand in line with consumer demands allows you to not only connect with them, but with retailers who are working to meet those demands. If it’s unfashionable to eat hormone-fed meat and people are willing to pay higher for hormone-free meat, why not tap into that market?
Keeping up with trends isn’t only about doing what’s profitable, it’s also about avoiding what’s damaging to your work.
7. Automate your SCM process
Automation can take your business to new levels by getting rid of clunky processes, human error and minimising the need for a large workforce or manpower. If you’re a small business competing with others that have the advantage of scale and thus resources, automating parts of your SCM process is incredibly useful.
You don’t need to switch to a completely automated system, because that could incur higher costs and greater losses—remember point #3?—but aspects of it can easily be automated.
Investing in order management system software like OrderTron can drastically improve the need for manual data entry, order management, stock monitoring and much more. It takes care of a large chunk of your work, allowing you to increase orders, both in terms of quantity and volume. Without the added work of order placement and tracking, communicating with clients, updated them on their shipments, so on and so forth, you can focus on the quality of products, and other services, strategising and marketing.
Food and beverage wholesale is one of the most profitable industries to venture into and if you’re already a wholesaler working in it, it might be beneficial to you to adopt some of the strategies mentioned above. It’s never too late to invest in your business, especially if the investment will only improve efficiency and profitability. If you’re a supplier looking to improve their service delivery and streamline the SCM process, register with OrderTron. Find details here!