There is something very important you need to do before you contact a wholesale supplier. You should view the chapters in Worldwidebrands.com’s education series, The Whole Sale, that explains how wholesalers operate and how they make money. Don’t assume that all wholesale suppliers will be willing to work with online retailers. You might think that because they want to sell products, they will welcome you as a new sales channel.
Factory-authorized wholesalers have good reasons why they prefer not to work with online sellers:
- Online retailers are typically small accounts. Real wholesalers – especially the large wholesalers – look for volume business. They spend most of their time dealing with retailers like Target, Wal-Mart, Office Depot and Home Depot who place large, frequent orders for products. With the small volumes from online retailers, a wholesaler actually spends as much time time processing a small order as they do on the ‘big box’ retailer’s order. As the revenues are much lower, their profit per order is lower. Unfortunately, beginner online retailers typically apply for many wholesale accounts – especially Drop Ship accounts – and then purchase very little. Wholesaler’s recognize that online retailers require a lot of support for very little return.
- Wholesalers have to pay commissioned sale representatives to support each approved retail account. Reps earn less commission from Internet retailers than their bigger box customers. Reps like to spend more time where they can generate larger earnings.
- Some manufacturers prevent their authorized wholesalers from selling to online retailers. This is typical of the highly recognized brands. You have to be an authorized dealer with large volume purchases. They do this to maintain a perception of their brand as a high value brand. Beginner online retailers often enter markets by slashing prices to be the lowest price on the web. Online sellers have very little overhead so can often offer products at lower prices than brick-and-mortar retailers. Once product prices plunge, brands become devalued. If the physical retailer (the largest source of revenue for wholesalers) cannot sell profitably, they will stop carrying that brand. Everybody loses.
These are just a few of the many reasons why a wholesaler may be reluctant to open an account for you as an online retailer. If you approach the wholesaler correctly, you can succeed in your application for an account on your first contact with a wholesaler:
- Only call the wholesaler when you are a registered business. Quickly let them know you are a valid business before asking about their products and prices. (“Hello, I am Chris Malta, CEO of Worldwide Brands, Inc, in Orlando, Florida.”). The wholesale rep is thinking: “WIFM.” (What’s In it For Me?) Help them understand you’re a RETAILER on a path to sell their products in volume. Quote your Sales Tax ID up front. This confirms that you are professional. Rehearse your call before calling. Make your introduction quickly and get to the point.
- Ask what the wholesale rep needs from YOU to set up an account. Come across as attending to the rep’s needs before launching into your own needs. [If you come across as high-maintenance, or a low-value account with no plan for growth, the wholesaler is likely to decline you for an account.
- List their requirements, thank them and hang up. Focus on determining their requirements, presenting yourself professionally and securing the wholesale account set up.
- The FIRST contact should be brief. Be prepared and professional. You want to secure that wholesale account, instead of “No, thanks.”
Click to review more of Chris Malta”s Wholesale Tips.