Wholesale on the Small Scale

Wholesale is often associated with large operations that provide millions, if not billions, of dollars of merchandise to various retailers and end-users annually. However, there is also ample opportunity in the field for those who wish to turn a decent profit on the scale of a small business.
Some organizations make use of wholesale representatives to sell their products to customers through an arrangement where the wholesaler takes a certain amount of orders, purchases enough wholesale goods to fulfill those orders and immediately moves them to the customers. This model can be profitable because the wholesaler carries no inventory and, as any business person knows, inventory is the equivalent of unrealized profit.

Wholesale stores have become more popular over the years. These stores carry goods at prices very near the amount of purchase as opposed to traditional retailers who use a different pricing model called “keystoning”. Keystoning is a method of pricing where the price demanded for an item is roughly 2 times what the retailer paid for the item. A store may sell items at far less than this rate and make its profit based on the ability to buy, and sell, in large quantities.

Oftentimes, these businesses are owned by an individual or family, despite the large amount of sales they make. Their advantage is that they can offer excellent prices to their customers while still making a good profit due to the large amount of merchandise they can move. Though “big box” stores have become a common facet of the 21st Century business environment, these small-scale stores still occupy an important part of the business community.

A major difference between the majority of wholesale businesses and retail businesses is the way in which they entice their customers. For the wholesaler, their customer is typically retailers. Retailers spend a great deal of time and money trying to sell items individually to consumers. This involves advertising, product placement, display techniques and competitive pricing. For the wholesaler, the most important selling points are timeliness, the ability to fulfill orders on demand and the ability to identify products useful to retailers before they hit the market. This type of marketing is a field that is particularly well-suited for those who have a talent for building and maintaining networks of business contacts and for those who have an ability to understand the business needs of many different types of merchants.

 

 

This entry was posted on Wednesday, December 10th, 2008 at 8:35 am and is filed under Wholesalers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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