If you want to start a wholesaling business you need to know all the facts how to become successful in this industry. And one thing you must know are the problems that each wholesaler encounters. Knowledge of these problems will serve as your tip how to run your wholesaling business. Below are some of the challenges that each wholesaler face:
As a wholesaler you need to consider the location of your business. You need to find a good location, which is closer to your retailers. Cost of the land is one factor in choosing the right location. There are locations closer to your retailer, but the cost of the land is too expensive. You also need to consider if the location is accessible by all modes of transportation like roads, airports, seaports and rail terminals.
Cost of Transportation
You also need to consider the cost of the transportation. Transportation cost includes the cost of delivering the stocks to the retailers. Shipping cost becomes more expensive because of the worldwide problem in fuel. The percent of transportation cost to your total distribution cost is quite higher. This transportation cost is usually passed to customers in order to have profit which makes the product prices higher. Today’s technology help wholesalers to efficiently manage their transportation cost. Some wholesalers use software to utilize the routing in order to establish delivery routes with less cost. While some use transports that is fuel efficient.
Wholesalers can use modern technology to help them become successful in the industry. The use of this technology usually requires a large amount of money does entail more cost.
This is one of the major problems of the wholesalers. Disintermediation is the removal of middleman among the transaction of two parties. In disintermediation, customer can go directly to manufacturers to buy their products. The use of intermediate like distributor, broker, wholesaler and agent are no longer required in disintermediation. Buyers can buy directly to the manufacturers via the use of Internet. In this case, buyers will pay less for the product. As a wholesaler you need to make extra effort to retain this buyer instead of letting them buy directly to the manufacturers.