How to Sell Wholesale Online

To successfully sell wholesale online, you need two things: a website and wholesale products. In this beginners' guide, we will dive into how selling wholesale works, choosing products to sell, setting your wholesale pricing and selling both to wholesale and retail customers through the same website. 

How Does Selling Wholesale Work?

Wholesaling refers to the selling of products to retailers, who will then resell these products to an end consumer. As a wholesaler, your products are discounted lower than the retail price, as the retailer needs to make a profit when they resell these to their customers. Some businesses are established only as wholesalers, others begin as retailers and then begin to also offer wholesale at a later date, and others begin with the aim to do both. 

The wholesale process relies upon retailers purchasing in bulk volumes, which allows the wholesaler to sell at a discounted price, usually 50% of the RRP. The retailer then on sells the products to their customers for the RRP, making a profit along the way. The wholesaler will have made a profit based upon their wholesale pricing, but they can also sell directly to the customer at the RRP. 

As a wholesaler, you will have lower overheads, there is no retail store to maintain, only pack and ship products in bulk, sell multiple products in one order, limited marketing required, and only dealing with retailers, not end consumers.

Choosing Your Wholesale Products

The types of products you will wholesale will depend upon the type of business you operate. If you are a retailer already, and either import your products or manufacture them, it makes sense that these will be your wholesale products to sell to retailers. Otherwise you will need to decide for which industry you will become a wholesaler.

Many people choose an industry they like are familiar with, and they use their knowledge and experience to identify which products to stock. For example, a sewer who imports thread to on sell, or a mechanic who wholesales car parts to garages throughout the country.

There are additional things you will need to consider, including:

  • demand - what demand is there for these products within your target area?
  • profit - can you purchase the products at a low cost price which not only gives you a profit at a wholesale price, but also a profit for your retailers?
  • supply - are you able to purchase these products when needed, or do you need to order in advance? 
  • competition - how many other wholesalers are there in your industry that you would be in competition with? 
  • inventory - do you have the space to stock large volumes of products?
  • supplier - do you have the option to purchase from multiple suppliers/manufacturers? What quality are their products, do they have a wide range, what are their return and payment policies, what is their minimum purchase quantity and is their pricing competitive?

Undertaking due diligence on potential suppliers is an important step in becoming a wholesaler. Ask for recommendations or contact others who resell the supplier's products too.

Pricing Your Wholesale Products

As a wholesaler, you will have three important prices for each of your products: your cost price, your wholesale price and your recommended retail price. 

  • Cost price - this is the price that you were able to purchase the product at from your supplier or manufacturer, and is likely to include shipping costs to you and any taxes you have paid.
  • Wholesale price - this is the price you will charge your retailers per product. Your wholesale price is a combination of the cost price of the product and the overhead costs associated with it, plus your profit margin. 
  • Retail price - this is the price your retailers charge their customers for the product they purchased from you.

While the RRP of a product is typically double the wholesale price, the wholesale price is rarely double the cost price. This is because a wholesaler sells products in bulk quantities, rather than individually like a retailer. A wholesaler also has fewer overheads than a retailer, in that there is no or little marketing or packaging required. Therefore, due to the large volumes and fewer overheads, the profit for a wholesale product is generally smaller than that of a retailer, such as around 20-35% of the wholesale price.

We have also found two great articles which explain things further, Choosing your wholesale pricing strategy and Setting your wholesale pricing for handmade products.

Selling Your Wholesale Products Online

When selling wholesale online, your products need to be only available to retailers for purchase, and not to the general public. Therefore you need to have a website that will let retailers purchase at wholesale prices, but not the general public. Having a password protected members area of your website is ideal, and Website World can provide this for you.

Our CMS gives you the ability to set up to eight wholesale pricing tiers, with each product able to have 8 additional prices to the standard price and have a minimum quantity for purchasing. Each wholesale customer can be assigned to one of these tiers.

There are a few ways that your retailers can gain access to wholesale pricing. You can add trade customers manually in the back end of the CMS, sync them with your accounting or inventory system (if it includes price tier associations and is integrated with our platform) or they can register via your website, giving you the option to consider their request. 

Trade customers will then have their own individual login to your website from where they will only see their allocated pricing, and can place orders. If you require the public to be able to purchase through your website, you can display and sell at the regular RRP without the need to login or have an account. 

For further information, please view Website World's Wholesale, Trade, B2B - Product Pricing and Customer Management guide. 

Tags: ecommerce  

Posted: Friday 8 July 2022

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