So you want to start selling wholesale?
If you’re a merchant currently selling to end customers, you know how competitive the eCommerce industry can be. Technology has lowered the barrier to entry – Solutions like Shopify let an entrepreneur setup an eCommerce store and start selling in less than a day.
It’s a tough market out there, and merchants need to take every opportunity to increase turnover and profitability. One of the most effective ways to do this is to start selling to other businesses, and compliment your “Business to Consumer (B2C)” sales with “Business to Business (B2B)” income.
Merchants that sell to other businesses are known variously as wholesalers, suppliers, or brand manufacturers. Ultimately, it doesn’t matter what you call yourself, if you’re selling to other businesses, you can significantly increase your profits.
Setting yourself up as a wholesaler doesn’t need to be daunting. We’re creating a set of guides that will lead you every step of the way. In this series, we’ll cover:
- Differences between selling to businesses and selling to consumers.
- The documents you’ll need.
- Writing your wholesale policies.
- The importance of the wholesale agreement.
- Understanding pricing.
- The ordering and fulfillment process.
- Shipping, and how to charge for it.
- Big box retailers.
- OrderCircle and how it can help.
We’ll briefly cover each of these areas below.
Differences between selling to businesses and selling to consumers
You’re probably already selling to consumers, either through a third-party website (like Amazon or ebay) or via your own dedicated eCommerce store. B2C is where most merchants start, and you already know the importance of a good website, fast distribution, great marketing, and excellent customer service.
Selling to businesses is different. Like consumers, they want value for money, high-quality goods, and fast service, but successful B2B relationships rely on more than that. Your business customer wants everything to be as efficient, flexible, and reliable as possible. You want to approach any B2B arrangement as a long-term relationship. That means keeping everything simple, transparent, and as easy as possible for them.
The documents you need
There are certain documents that a business customer will expect you to provide. These are standard for just about any B2B relationship. They include:
- An order form – A simple line order form where your business customer can request the items you supply. The order form typically lists each item and they fill in the quantities.
- A price sheet – Another simple document that lists the items you sell together with retail and wholesale prices. Some merchants combine the order form and price sheet together.
- A catalog – This has the details of the products you provide. It includes product descriptions, specifications, unique selling points (USPs), pictures (where relevant) and any other details your customers need.
You’ll also need wholesale policies and a wholesale contract, we’ll cover those next.
Writing your wholesale policies
It’s vital that you have clear wholesales policies. These are the overall guidelines and terms that you and your business customers will work to. Wholesale policies generally include areas like:
- Order quantities and minimums.
- Delivery times and shipping costs.
- Details on branding, packaging, and the like.
- Payment terms and returns policy.
- Any other important areas.
You will need to create your own wholesale policies (although we’ll provide some guidance). Once you have wholesale policies, you’ll need to create a formal agreement for each client which references those policies.
The importance of the wholesale agreement
Your policies define your relationship with your business clients, your wholesale agreement means you and they both agree on those policies. A wholesale agreement is a contract – It clearly sets out all of your expectations of your clients and tells them what they can expect from you. It means you’re both entering into a legal agreement.
It’s very important to get pricing right, especially when you’re selling to other businesses. Most business customers will expect you to offer “keystone pricing.” Keystone pricing means you sell products to your business customers for half of the recommended retail price. For example, if you expect a product to retail for $50, you’d provide it at a wholesale price of $25. There’s not often much room for negotiation on pricing, so basing your prices on a 50% discount to retail is a good rule of thumb.
The ordering and fulfillment process
A typical order from a business customer works as follows:
- They create a “Purchase Order (PO)” and send it to you. The PO has details of exactly what they want to order.
- You confirm you are able to meet the requirements of the order (e.g. stock levels, shipping etc.)
- You approve the order and raise an invoice.
- You ship the order to the client.
- You send the invoice for payment.
Shipping, and how to charge for it
Shipping costs can be significant. In almost every case, you will want your business customer to pay for the cost of shipping, and you should highlight this in your policies and contract. Your clients might want you to use their UPS or FedEx accounts, or you could simply pass on the cost of shipping as a “straight through” charge.
Big box retailers and what they might want
Getting into a national retailer like Walmart, Target, Sears, or Home Depot can give your product a huge amount of visibility, and significantly increase your sales. Unfortunately, this doesn’t come without some hidden costs – Many big box retailers will expect very favorable (for them) payment terms, and may even insist on “Free Fill” – Essentially meaning that for their first order, you fill their shelves with your product for free.
How OrderCircle can help
If all of this sounds like a lot of work, we can help. OrderCircle is an online ordering, fulfillment, invoicing, and client management system. It brings the convenience of B2C ordering to B2B customers, making it as easy for a business to order from you as it is for you to order from Amazon. OrderCircle provides:
- A complete online ordering service for your entire product catalog.
- Easy, transparent pricing, including special offers, sales, and discounts.
- An effortless way for your business clients to order from you, including repeat orders.
- Simple order approval, tracking, and invoicing with built in payments.
- Built in support for shipping, and integration with Quickbooks and ShipStation.
- Plus lots of other options and features.
Features coming soon
We’ve got a full development roadmap for OrderCircle and soon we’ll add:
- Full stock and inventory management.
- Complete analytics, so you can see where you’re doing well, and fix the areas where you aren’t.
Why not give it a try today with a free 14 day trial, no credit card required. Sign up for free.
Don’t be daunted by the idea of selling wholesale – It’s a great way to increase your sales, turnover and profits. Read through our helpful guides and help your business grow.