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Maximising Your Retail Margins: A Beginner’s Guide to Wholesale Shopping

Maximising Your Retail Margins: A Beginner’s Guide to Wholesale Shopping

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Running a retail business can be a fast ticket to success, wealth and financial independence. There are many benefits to running a retail business, including not having a boss (because that’s you), unlimited earning potential, selling goods that you’re passionate about and not having to work in a dull office. If you’re successful enough, you can even employ other people, offering them an opportunity for a steady wage and stable job.

But running a retail business also comes with much responsibility. If you don’t turn a profit, the onus is on you to turn things around. And maximising your retail profit margins is the key to making a profit in the retail goods business. There are a few tricks to nail this, but one major component is wholesale shopping or savvy bulk buying of your stock from a wholesaler. This helpful article will share a beginner’s guide to wholesale buying, so if you’re about to launch a retail or eCommerce business, you’ll know all there is to know and where you can buy umbrellas wholesale and other goods. Continue reading to learn more.

What is Wholesale Exactly?

Wholesaling can be defined as when a wholesale company (in most cases) buys goods in bulk batches directly from a manufacturer (a company that produces goods) at a discounted rate. The wholesale company then turns around and sells those goods to a retail company or trader (like you) at a slightly higher price. The retailer then sells the goods at the recommended retail price, or higher, or for less, if they have a sale or offer discounts. Each company/business entity involved in this supply chain makes a profit margin at each step. The manufacturer can make the goods at an affordable rate and profit from the sale to the wholesaler. Then, the wholesaler makes their margin from the sale to the retailer. Finally, the retailer businesses’ profit margin is made when consumers buy retail goods online or in-store.

For instance, an umbrella manufacturer produces a bulk lot of umbrellas, pallet upon pallet. These are sold, perhaps among other items, to a wholesaler company. That company then sells to various accessory retailers, such as department stores and clothing stores. These shops then sell the umbrellas at retail value to customers both in-store or online only, and everyone makes some money along the way.

Different Wholesaler Companies

There are three main types of wholesaler companies: general merchandise wholesalers, merchant wholesalers, and limited-line wholesalers.

A general merchandise wholesaler company will deal with a large amount and variety of different stock, buying from a range of different manufacturers and selling wholesale goods to a diverse array of retail customers, including small and large retail outlets including startups like yours. They will typically provide storage facilities, transportation of goods, and inventory management of their stock.

Merchant wholesalers, on the other hand, are typically businesses that handle the majority of their business in-house. They’ll connect with manufacturers, buy bulk goods, store inventory, and sell to retailers at wholesale rates.

Finally, a limited-line wholesaler usually specialises in a niche product category and sticks to this niche market. For instance, a company might only wholesale medical supplies, hobby equipment, or ammunition for firearms. In some markets where a wholesaler holds a monopoly on their goods or brand, they can become quite powerful, influential and profitable without direct competition eating away at their profits. This applies to retailers, too; if you’re the only store that stocks a product line, you’ve got an edge in the market.

What Are the Benefits of Buying Wholesale Goods?

As an emerging or new retailer, there are definitely some key benefits to buying your stock wholesale. Let’s list them below now.

You’ll Make Cost Savings

As mentioned above, due to buying goods in bulk, wholesalers can typically pass the discount they receive from manufacturers on to retailers while still factoring in their profit margin. You can save some money on bulk orders, obtaining your retail stock at a good discount, and then selling them with your own profit margin baked into the price. This equals money in the bank at the end of the day, which will pay your overheads, staff, and ultimately yourself. Depending on the volume of your bulk wholesale orders, you could potentially get an edge on the competition if you can move a large amount of stock through your business. In most cases, the more units you buy, the larger the bulk discount is.

You Can Build a Reliable Network of Wholesale Suppliers

You never want to rely on a single wholesale company to supply your new retail business if you can avoid it. Unless you’re selling a niche product that only one wholesaler sells, you should diversify by sourcing your stock from a vast network of wholesalers. The benefit of this approach is that you can shop around for the best price on retail goods each time you order and ensure a consistent supply of stock to sell online or in-store. Suppose one wholesaler has supply issues or delays or drops the ball on customer service and delivery time. In that case, you can contact another company in your network to supply the goods you need to keep your business ticking along.

You Can Scale Your Business

The main goal of your business should be growth and increased profit. After all, that’s why you’re launching a retail business. You should always aim to scale up the business and maximise your profits. By buying your stock wholesale, you’re taking advantage of the discounts offered by the wholesaler. You can then funnel the savings back into your business to scale up. For instance, with the cost savings you get from buying your inventory at wholesale rates, you can invest in additional staff, new premises, software, and more.

Maximise Profit

You might be wondering how you can maximise your profit margins. The trick here is to cut costs while maximising profits. Wholesale stock rates are one great way to achieve this, but you can also do other things like outsource your payroll, accounting and other business functions to save money that you would otherwise spend in-house on these functions.

A Wholesale Shopping Summary

This informative article has shared all about maximising your retail margin and how a beginner in this space can take advantage of wholesale shopping to lock in bulk discounts and utilise these to grow your business. By now, you’re an expert on this, and you should be ready to take the world by storm.

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