What To Know Before You Enter Wholesale As A Small Business
For small businesses wanting to make the leap from direct-to-consumer (D2C) to wholesale, there are several important factors you need to weigh up first. Operations expert Rohan Inneh outlined key insights in our recent masterclass, Master Your Workflow, that can help you decide if you’re ready for this next stage of growth. From ensuring strong customer demand to adapting operational processes, here’s a breakdown of the most crucial steps.
1. Solidify your brand - and your customer demand
First things first: don’t rush into wholesale without strong branding and a steady customer base. According to Rohan, attempting wholesale without these fundamentals puts you “in the danger zone”; If your D2C sales are already struggling or unstable, it might not be the right time to scale up. Wholesale success depends on existing customer demand and your brand’s ability to carry its weight in larger markets. Before jumping into wholesale, make sure your brand can stand out in a crowded marketplace and keep customers coming back.
2. Scalability and supply chain stability
Scaling up for wholesale requires a bulletproof supply chain. Small businesses often face challenges managing larger order volumes, so it’s critical to assess whether your supply chain can handle increased demand without compromising quality or reliability.
Rohan suggests securing a backup supplier to mitigate any disruptions. Think of it like an insurance policy for your business: if one supplier can’t deliver, your backup ensures your orders don’t grind to a halt.
3. Know when to make the move
Timing is everything. Rohan advises small businesses to consider wholesale when they see their D2C growth plateauing. If your sales are no longer growing exponentially, or if your current market seems tapped out, it could be the right time to explore wholesale as a new avenue for expansion.
What’s more, wholesale could offer better potential in certain countries or regions where your D2C efforts haven’t gained much traction. If these situations sound familiar, wholesale might offer the growth opportunity you need.
4. Operational efficiency is key
Operational efficiency isn’t just a buzzword: it’s a critical component of wholesale success. If your business is already operating like a well-oiled machine, handling bigger wholesale orders will be much smoother.
Rohan recommends reviewing your processes to ensure they’re robust enough for larger volumes. Are your fulfillment and inventory systems up to scratch? If not, now’s the time to fine-tune those processes before venturing into wholesale.
5. Adjust your pricing model
Pricing is one of the most significant shifts when moving to wholesale. Rohan discusses the need to transition from margin-based pricing (common in D2C) to markup-based pricing for wholesale. Margins can be slimmer in wholesale due to the volume and the need to meet retailer expectations, so it’s essential to get this right. A solid wholesale pricing strategy will ensure you’re still making a profit, even as you offer retailers a discounted rate.
6. Wholesale-specific marketing and platforms
Selling to retailers requires a different approach than selling directly to customers. You’ll need wholesale-specific marketing materials, including a product catalogue that’s tailored to your B2B audience.
Also consider setting up a wholesale portal on your website to streamline the process for potential buyers. Wholesale platforms, like Faire, are also valuable tools that help small businesses connect with thousands of retailers. These platforms can significantly boost your reach and help build a strong wholesale customer base.
7. Wholesale readiness checklist
Before diving into wholesale, Rohan recommends running through a checklist to assess your readiness. The checklist should cover areas such as pricing structures, supply chain stability, marketing materials, and fulfillment capabilities.
He also stresses the importance of having clear terms and conditions for your wholesale buyers to ensure smooth transactions and protect your business.
Explore all channels
Rohan highlights the importance of exploring all available channels—both online and offline. While many brands are hyper-focused on getting their products into big retailers like Tesco or Sainsbury’s, there are other untapped opportunities. Consider non-traditional outlets like hotels, gyms, or even boutique markets. Remember, it’s not about the channel, but about where your customers are. Whether it’s a shopping centre kiosk or a local spa, find where your audience hangs out and meet them there.
Conclusion
Wholesale can be a powerful growth strategy for small businesses, but only if you’re fully prepared. Focus on building a strong brand, ensuring scalability, refining operations, and adjusting your pricing strategy before making the leap. With these foundational elements in place, wholesale could be your next big success.
