If you consider starting a retail business, creating solid relationships with wholesalers is a priority.
We estimate to 1,000,000 the number of companies in the wholesale industry across Western countries, so finding the right supplier and creating long term partnerships can be a painful journey.
After discussing with retailers using uppler.com, we have summarized below the best tips to achieve this goal:
1. Understand in depth the functioning of the wholesale business
The first thing you need to understand is that the wholesale industry remains very fragmented. The fifty largest wholesale distributors in the US represent today only one-quarter of the total industry turnover. Thus, you won’t find an obvious answer when wondering which partner you should rely on. Moreover, there is a variety of different players:
- Direct players:
- Distributers / agents /importers
- Retailers / department stores / e-retailers
- Indirect players
- Delivery companies
- Insurance companies (credit insurance)
- Payment service providers (escrows)
- Cash management services (factoring)
2. Your ideal wholesaler will depend on your ordering volume
The main factor determining the parameters of a wholesale transaction is volume. Pricing first: contrary to retail prices, wholesale prices will vary depending on the volume ordered. Higher volumes give you a higher negotiation margin.
But volume will also determine your ability to do business with a wholesaler. The notion of Minimum Order Quantity (MOQ) is key. Wholesalers use it to filter the small retailers, but also to keep transactions profitable. Indeed, delivery fees and fix costs are absorbed only from a certain volume ordered. So if you are a small business you will need to deal with smaller suppliers first. Prices will be higher but you have no other choice as everything depends on volume.
3. Where to find the wholesaler’s contacts and products
It’s a jungle out there. There are so many directories and noncurated platforms that you might get lost if you search partners on the internet randomly. I will go straight to the point, there are 4 ways only to source the best suppliers:
- TRADE SHOWS: – There are tons of them, and each country has its own trade shows. A non-exhaustive list of fashion trade shows can be found on directories such as http://www.eventseye.com/ or http://www.modemonline.com/ for fashion. Browse websites to determine the trade show corresponding to your product’s style and to your geography.
- ONLINE WHOLESALE MARKETPLACE – Accepting to pay to be present in a marketplace is a proof of seriousness and organization from the supplier. You can find different B2B marketplaces depending on the vertical you try to tackle. Uppler.com, of course, is one of them, covering Fashion, Home, Beauty, Toys, Sports, Electronics, and Food.
- OFFLINE WHOLESALE MARKETPLACES – It is the best place to actually meet the suppliers and feel the quality of the merchandise. There are physical B2B marketplaces in every country for every industry. For instance, each country has its own area dedicated to wholesale fashion: The Garment District (New-York), Le Sentier (Paris), The Center Gross (Florence)…
- WORD OF MOUTH – There are many people in your industry you can take advice from. First, your competitors. If you are a medium size consumer goods retailer, there is few chance that you are really at war against your competitors. So try to get on well with them and ask them about their suppliers. If they refuse to cooperate, investigate their products to find out where they come from. You can also ask referrals to your current suppliers, government trade organizations, or experts on Quora and specialized blogs.