You may have heard about retailers purchasing their stock wholesale, but what does it mean, and how can your business benefit from it? Wholesale, or bulk buying, can dramatically improve your long-term profitability by reducing singular unit cost, but it can require a sustainable cash flow.

In this article we’re going to look at:

  • What does buying wholesale mean?
  • Who can buy wholesale products?
  • What can you get on wholesale? 
  • How do you buy wholesale products?
  • What other choices are available?

What does buying wholesale mean?

When products are sold wholesale, their individual unit cost is typically much lower than what you might find at a standard retailer. These lower costs are available for several reasons. First, you’re purchasing the goods from higher up in the supply chain, so other businesses haven’t yet added their markups. Second, purchasing in bulk guarantees the sale for the distributor.

A distributor’s entire business model revolves around supplying other businesses, while retail businesses supply consumers directly. As a business owner, purchasing your supplies in bulk directly from a wholesaler can be a very cost-effective method of filling inventory. 

Who can buy wholesale products?

The majority of a wholesaler’s business usually comes from business-to-business (B2B) transactions. While individuals are allowed to order from a wholesaler, their order levels may not be high enough to meet any minimum requirements. 

These minimum requirements could be as simple as paying an extra fee, or could require the order’s total to be above a certain amount. Wholesalers have these requirements in place because they need to sell large quantities to remain profitable. 

What can I get on wholesale?

Wholesale distributors exist for almost every product you can think of. Whether you are starting an Etsy shop to sell handmade jewellery, or ordering supplies for a new catering business, all it takes is a quick search to find a wholesale supplier. 

How do you buy wholesale products?

Before you can start purchasing wholesale goods for your business, you need to sort out a couple of things — the first of which is where to find a distributor.

Where to find a distributor

In order to start purchasing wholesale goods, you’ll need to find a wholesale business that sells the items you’re after. You can find different distributors for different sectors — for example, a catering business may choose to order its supplies from JJ Foodservice.

Your best bet is to do some online research into suppliers that deliver to your area. Once you’ve found some suitable distributors, then compare products and prices to see what would work best for your business.

Some things you should consider when choosing a supplier are: 

  • Order cost.
  • Minimum order size.
  • Delivery times.
  • Customer satisfaction.

Be honest with your suppliers

Being upfront about how well a certain product is selling can give them the incentive to offer alternatives or discounts on larger orders. 

Fostering a good relationship with your suppliers can come with certain benefits, like greater credit periods if you encounter problems with your cash flow.

Delivery or collection?

Some wholesalers may offer a discount if you travel to the warehouse and collect the items yourself. While a clearly reduced price can be tempting, it’s important to weigh up the personal cost of collecting the order yourself. 

Some points you may wish to consider are: 

  • How long would the trip take (there and back)?
  • How much fuel would you spend on the journey (there and back)?
  • Do you have the equipment to collect your entire order?
  • Would you be able to collect it sooner than it was delivered?

If your chosen wholesale supplier does allow collection, figuring out the questions above can help you decide which option is more affordable for your business.

Organise storage space

When ordering your supplies in bulk, you’ll need to set aside a much larger storage area than if you were only buying a weekly amount. Depending on your premises, this can require some extra organisation to manage properly. 

What other choices are available?

Depending on the products you’re buying and how much the wholesaler is charging you, it can feel like you’re not getting a very good deal. If your business sells or uses products from a specific brand, you could try contacting the manufacturer directly. 

You may find out that the manufacturer has a minimum order requirement, or won’t deliver to businesses below a certain size. If that happens, ask if they can provide you with a list of reputable distributors. The higher up the chain you can purchase your products, the better your profitability becomes. 

Keep an eye out for your finances

While buying in bulk brings your unit costs down, it can raise your short-term costs. If you’re having trouble with cash flow, this could prove risky for your business. Accounting software like the Countingup app can help you manage your business’ expenses and reduce this risk. 

The automatic expense categorisation is especially useful for managing specific business costs. All your business expenses get automatically sorted into HMRC-approved categories, perfect for keeping your finances organised.

You can also use the app to provide you with accurate, real-time cash flow insights. This can give you an up to date view of how your business is coping, and how much you have available to spend on replacing stock.

Start your three-month free trial today.

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