Monday, June 17, 2024
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B2B Wholesale for Beginners: Understanding the Challenges, Benefits, and Requirements

The Covid-19 crisis was a critical turning point for B2B wholesaling. The global B2B wholesale growth accelerated due to the new buying behaviors of customers worldwide and companies have had to rapidly pivot their operations to keep up with the demand. 

In essence, buyers have started demanding an improved buying experience from companies. As a result, B2B wholesale organizations needed to shift their operations to counter this. Nowadays, they need to be in a position to enable digital commerce and shift the role of their sales operations to take on a more advisory role.

So, how do you go about launching your B2B wholesale business? What challenges do you need to look out for, and what can you expect to get out of it? We broke down a basic guideline of the business model and what you can expect.

What is B2B wholesale?

Let’s kick off with what B2B wholesale is. Essentially, this is a specific business model where instead of selling your products individually to consumers, you sell them in bulk and at a discount to other businesses. So, you will be supplying bulk products to other brands and companies, who will then be selling them to their customer bases. 

If you are just starting, it might seem difficult to reach that first client. There are currently several options for where and how B2B wholesalers can sell online. There is, of course, your website, but, depending on your business strategy you may prefer to use a B2B wholesale marketplace.

Selling your products on a B2B wholesale marketplace enables you to connect with more potential buyers, reinvent your selling experience, and, ultimately, increase sales.

What are the benefits of running a B2B wholesale business?

As you can imagine, running this type of model comes with plenty of its benefits, especially if you have established a lucrative deal with some top brands. 

First, you can expect increased average order value (AOV) and volume. Because B2B wholesale is focused on moving large volumes of products, you can generally expect higher average AOVs and order volumes as a rule of thumb. 

This is especially true when you have established a loyal client who orders regularly from you. Once you have established that, you can expect longer-term relationships with higher customer lifetime value. 

B2B wholesale also puts you further back in the supply chain, which means that you have more control over the processes and inventory. If you think of it, B2C relies heavily on their suppliers as well as their customers, while B2B wholesalers can control more of the inventory and fulfillment. 

Lastly, you can expect higher brand awareness. Think about it. If you are selling your products to a large chain, they will be selling it to their wider, bigger range of customers. This means you can generate brand awareness for your company by simply having your products be resold by retail partners.

What are the challenges of a B2B wholesale business?

As with anything in life, the benefits of B2B wholesaling are accompanied by challenges. While finding that big, loyal client is one of the biggest advantages, the problem lies in actually landing the client. 

The process of establishing relationships with the client can be long, tedious, and sometimes highly frustrating. From there, the trick is to carefully manage the relationship in order to retain it. 

Nurturing business relationships can be a highly intensive process, especially with a client with a high purchase power, so make sure you have account managers who are dedicated to the account at all times to maintain it. 

Secondly, ensuring that you are on top of trends, technology, and production at all times can be a challenge. You will need to ensure that you are producing enough for your clients to resell, and if you are not, you can stand the risk of losing out on the long-term business. 

What should you consider before starting a B2B wholesale business?

The trick is to do research into your intended niche before you go into it. You will need to know what the market wants and needs. You will also need to know what your capabilities are and what you can produce. 

Have a keen sense of what you can realistically achieve and where your growth points are. If you have promised something to a client, make sure you can live up to it. Otherwise, you face losing out on long-term business and putting your name at risk. 

The bottom line 

B2B wholesale can be an exceptionally profitable sector. It is up to you to know what you are going into and maintain your growth. We hope our guide helped you better understand the challenges you will be facing and how to overcome them.

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