The products we use daily have undergone a lengthy process before they made their way into our hands. They were first created and packaged by manufacturers, shipped to retailers next, and then sold to the consumers. In between the manufacturer and the retailer, a middleman is involved, called the distributor, and they’re the ones responsible for transporting goods from the manufacturer to the market.
Some business owners operate as retail distributors who order products from a manufacturer and then directly sell them to consumers, while others work as a merchant wholesale distributor, meaning someone who orders from manufacturers then distributes the products to companies who either resell them in the market or use them in their own operations.
Essential Skills in a Wholesale Distribution Business
Your skills in sales, negotiation, and business operations are all crucial if you want to venture in a wholesale distribution business. You need to be a charismatic negotiator toward manufacturers in order to persuade them to sell their products to you a low price, so you can sell them at a profit to retailers or other distributors.
Operational skills will of course be essential in running your business. Warehouse management and other logistics will need to be expertly monitored by you. You also need finance skills to be certain that you’re investing in the right equipment and business tools. For example, durable and high-quality commercial shelving units; a superior storage unit like such is an investment that can guarantee a high ROI because they store your products safely.
Marketing and entrepreneurial skills are also needed, because like any other businesses, a wholesale distribution company also has to keep up with the trend. They should also understand their market’s needs to be able to serve them excellently.
Tips On Getting Started
You have three options in starting a wholesale distribution business, and those are buying an existing one, starting from scratch, or investing in a business opportunity. Each option entails advantages and risks, so it’s important to assess your situation carefully first.
Buying an existing distribution business may jumpstart your progress faster because you can benefit from the seller’s existing knowledge and client base. The risks, however, include the company’s reputation; if it’s not the best, it will be your job as the new owner to improve it.
Starting from scratch can be costly, and entering the industry as a total newcomer can be daunting. It’ll require thorough marketing before you can have a stable client base.
But the riskiest choice could be investing in a business opportunity or franchise. If you’re choosing this route, make sure the originating company is a reputable one, and that you’d be guaranteed the best training and support to ensure your success.
To ensure your business’s success, avoid overextension of credit to customers. This means a customer demanding an extended payment term, which can hurt your business in time. When selecting clients, make sure to check their credit references first. It would help to set up an appropriate credit limit in advance, and to review your customers’ accounts periodically to assess which ones are worth keeping.
When dealing with manufacturers, push them to fulfill and ship your orders on time or even earlier. Ask them to provide a realistic time frame and make sure they deliver within that given period. Train your staff to properly handle complaining customers when the shipments happen to arrive late.
Avoid underestimating the value of relationships with customers. The best way to understand the market (a.k.a. your clients) is to forge a deeper connection with them. As mentioned, being a distributor also requires an in-depth knowledge and understanding of the market.
Identifying your strengths and weaknesses can be difficult when you’re starting out, but as you go along, you”d have to be fully aware of them. Get the appropriate help to improve on your weak areas. Take small steps and you’d feel triumphant eventually.