5 Steps To Become a Wholesale Distribution Business

What Exactly is a Wholesale Distribution Business?
A wholesale business is a lucrative enterprise where a wholesaler can earn a considerably large amount of money from single sales. The entry barriers are not so strict that only millionaires can start it. Wholesale distribution business involves acting as an intermediary between a manufacturer of a product and the retailers. When manufacturers produce goods in large quantities, they need to find a way through which these goods can penetrate the market easily and get to the end users.
This is where the wholesaler comes in; the wholesalers buy the goods in bulk from the manufacturer and then break it into smaller pieces so that it can be sold to retailers who would further break it into smaller pieces so that it can be distributed to the consumers.
Although, some manufacturers sell directly to the end users and also, we have wholesalers who also sell directly to end users. A wholesaler can also have a chain of retail distribution outlets of his own so that he can also retail his goods by himself. For instance, large supermarkets may buy directly from the manufacturers and then sell directly to end users. Wholesale traders can also supply goods to end users that buy in bulk like large institutions, contractors and other commercial users.
The mode of operation of a wholesale distributor involves having an individually operated business that would be involved in buying and selling goods which you have assumed ownership of. Normally, you would have a warehouse where your goods would be stored and eventually distributed to your buyers. Wholesale just like other trading businesses involves buying and selling goods for profit, the only difference is in the quantity of goods you would be selling and the category of people you would be selling to.

Starting a Wholesale Distribution Business – Sample Business Plan Template

Do you know that wholesale distribution business makes for about 13% of the GDP of the United States of America alone? That shows how lucrative and large wholesale distribution business is. There is also a lot of opportunity to get into this type of business; that is to say that wholesale distribution business is competitive but not stifling.
Before you can get into this business, you have to develop some key skills either by training or reading. First, you have to have strong negotiation skills; you also have to develop your salesmanship skills (which of course involve a lot of things), financial skills, business management skills as well as your networking skills. These skills are very much needed especially since your major goal is to maximize your profit such that you would make as much profit as possible and at the same time offer the best prices and deals to your customers. You would also need good people management skills to be able to effectively manage your customers as well as your employees.
1. Training-: It’s true that wholesale distribution business sounds like an easy buying and selling routine but another truth is that even this simple buying and selling routine can be very tricky. Wholesale distributors have a lot of tricks up their sleeves which they use to manage their business efficiently and maximize profit but this may not be visible to an outsider. For instance; wholesaler distributors know how to handle stocks which are about to expire such that they don’t lose their investments. There are a lot of things that a wholesale distributor would know which an outsider may not know about therefore, there is a need to at least get some form of training and acquire the needed skills to run a wholesale distribution business effectively.
2. Choose a Niche-: There are different niches in this business and you have to choose the one you want to deal in; do you want to deal in fast moving consumer goods like food products, groceries and similar goods? Or would you rather go into the construction industry selling building materials and supplies? Or would you rather deal in electronics or computer gadgets?
This page can hardly contain all the various niches that you can deal in hence; you must sit down and find out which products is hot selling. Which products allow more profit and turnover? Which ones are easy to distribute and cheaper to create awareness for? And most importantly, which products are you passionate about? All of this questions when answered, would give you a clear idea of the most suitable niche for you.
3. Secure an office space and a warehouse-: The next step involves securing a suitable space to store your goods and also, a space that could be used as a point of access for your customers. You don’t necessarily need a big office space as a beginner; you could just map out some space in your warehouse to be used as an office space so as to reduce your startup capital.
4. Register with manufacturers-: Now, you have to find a way to contact manufacturers of products in your chosen niche. Most manufacturers would require that you register as a wholesale distributor with their company and would also have some specific criteria that must be met before you can be granted distributorship rights with their business. Some of them would require you to show proof of turnover of a specific amount; some of them would also have unique location requirements.
Becoming a wholesale distributor for big companies who already have large number of distributors may be difficult for a beginner but you can solve this challenge by initially registering as a sub-distributor with a bigger wholesaler so that gradually you can move up the ladder to become a major distributor or you could look for new companies that are still searching for wholesalers to distribute products for them.
5. Identify your customers and find a way to reach them-: Lastly, you should try to identify the retailers you would be selling your ware to and get them to register with you as their supplier. If you are entering into a highly competitive niche; it makes sense to employ market penetration strategies like making your goods cheaper than those of other distributors. This is one sure-fire way to get more customers for your business. You should also employ a lot of marketing and advertisement strategies to get more customers for your wholesale distributorship business.

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