When is Wholesale Really Wholesale
You?ve finally found the wholesale source for the high demand widget that is selling like hotcakes on the Internet. Thoughts of watching the money pouring in and celebrating the new found success selling widgets has you so excited that you can?t wait to buy 5 widgets at wholesale and double the investment.
After a lot of effort to market your widgets, you haven?t sold any. Then, much to your surprise, you find others selling the same widget at a much lower price and doing a great business. You can blame the wholesaler for your lack of success or you can face the truth about wholesaling and volume purchasing.
So, after an unsuccessful attempt to sell widgets, you decide to do the research to find out why you couldn?t compete. The first eye opener is that you can find the widget at a number of places selling for less then your wholesale cost.
Lets look at the reasons for this.
- The retailer can buy in bulk and receive quantity pricing
- In many cases this also qualifies the retailer for manufacturers wholesale rebates
So it now seems that the word wholesale is a relative term. Small businesses get first level wholesale pricing. Large businesses (with great buying power) get 2nd and 3rd level wholesale pricing plus incentives. As an example, the small business may pay a price of $10 each buying wholesale widgets in quantities of 1-10. The large business may pay $5 each for the same widget in quantities of 500-1000.
So, is there any recourse for the small business?
Yes, The simple answer is Market Research.
OK, how can market research help me with wholesale buying?
The problem that needs addressing is buying widgets at to high of a price to be competitive. Plus, there are hundreds of places that sell widgets for a lot less then you can. If the demand, competition and average selling price of widgets can be determined, then you can make an informed decision about the selling potential of the widget.
That is the simplified version of the answer, but touches on the main points of market research.
You can do the research manually but by far the best bet is to use one of the existing market research tools available on the Internet. A moderate investment is required up front but the information compiled and presented is essential to profitable marketing.
A clear understanding how wholesale works in an open market along with good research can multiply your chances of successfully operating a small business. This applies to online storefronts, auction sellers, or anyone doing business from home.
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