Chapter 7 - Wholesale Suppliers

Wholesale suppliers allow sellers to build more structure and predictability in their sourcing process. Products can be ordered in bulk, which allows the seller to negotiate pricing based on order size, bringing the cost per item down. Stock can be replenished. Exclusive agreements may be negotiated to limit competitors accessing the same product.

Sellers take on an added challenge in locating and selecting the right supplier. There are additional business processes involved in forming a relationship with a supplier. Ordering stock in bulk takes greater capital and may necessitate lending solutions.

Advantages

  • Items are available in new condition with tags and packaging
  • Stock can be replenished.
  • Cost per item can be negotiated based on order size. 
  • Margin can be more generous than other types of sourcing solutions.
  • Sourcing does not necessarily require immediate payment.
  • This sourcing approach can be scaled effectively to very large operations.
  • Sellers can specialize in a product niche
  • Sellers can develop unique products or negotiate exclusivity with suppliers

Disadvantages

  • Stock availability is subject to manufacturing conditions.
  • Depending on the minimum order size per product, this approach may involve more risk and financial commitment.
  • Quality of opportunity differs by supplier
  • Orders must be placed in advance
  • Requires higher level of organization on the part of the seller
  • Effective selection of products is dependent on clear understanding of market conditions
  • Storage requirements may increase with large order sizes
  • Product cannot be inspected in person, though there are usually processes for acquiring samples, refining product specifications and resolving defects
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