Starting A Wholesale Business:

By : Johnathan Bakers   
Submitted 2008-02-25 20:50:33 In a wholesale business, you basically act as a middleman, buying goods from manufacturers and distributing them to retailers. Most manufacturers only supply minimum full pallet loads, but prefer it if the distributors buy a whole container at a time.

In 1982, I left school and started a wholesale business with my father supplying packaging to the retail trade. We initially started supplying paper bags, potato bags & carrier bags. The retailers kept asking us to increase our product range and within a couple of years we had grown into a full blown wholesaler, supplying everything from confectionary, stationary, medicines, toys, greeting cards & a toiletries.

As business grew, we decided to employ sales people to visit the retailers and offered a free delivery service within a 50 kilometre radius. This proved very popular and soon we had a small sales force. Each salesman had his own exclusive territory and I used to cover for them when they were ill or on holiday. Because of this I got to know all our customers.

I left the family business eight years later to start my own business, but this wholesale business is still thriving in Dundee today.

In this business you need good negotiation skills to persuade the manufacturers to sell their products to you at the lowest possible prices so that you can add a decent margin to cover the costs of distribution and leave a profit.

We used all sort of strategies to achieve the best possible prices, ranging from simple haggling, quantity discounts, early payment discounts and even buying whole container loads in partnership with other wholesalers that did not compete in our area.

Anybody setting up a wholesale business will definitely need some marketing ability to persuade the retailers to buy from them. We did a lot of cold calling and visiting potential customers to try and persuade them to buy from us.

The ideal location for a wholesale business is to be beside other distributors like the national cash and carries and newspaper / magazine distributors. There is absolutely no point in being off the beaten track unless you are really large, because many retailers will not make a special trip just for you.

Your location has to central so that you can service your customers quickly especially if you also provide a delivery service. Retailers like to pop in, walk around with a large trolley and load up the goods in their vans so good parking and loading facilities are a must.

The hours are decent as most wholesaler open around 8:30am and close at 5:30pm.Many also open for a half day on Saturdays and have a late night once a week for retailers that struggle to make it during normal working hours.

You will have to specialize in one field to compete with the national cash and carries which are forced to carry a limited range of all products. We specialized in packaging and later greeting cards and toys. Some wholesalers we knew specialized in electrical products whilst others focused on specialty foods or even cleaning materials.

Cash flow is very good as generally speaking wholesalers buy on credit and sell for cash. Margins can however be very tight as you need to sell your products at a keen price so that the retailers can make a decent margin to cover their higher overheads. The best margins to be made are when you import full containers from overseas.

This business is getting tougher by the day as large supermarkets are taking a greater share of retail spending. They generally buy direct from the manufacturers and therefore have no need for wholesalers. Even then, there is still room in the market for a well run specialty wholesalers. Author Resource:- Naz Daud - CityLocal Business & Franchise Opportunities http://www.citylocal.co.uk