Online and brick-and-mortar retailers can use the versatility of wholesale distribution to broaden their product offerings. Wholesale distributors offer a wide range of products from a variety of manufacturers with business-to-business (B2B) and business-to-consumer (B2C) fulfillment options.
With wholesale distribution resources in their toolkit, merchants can add an entire product catalog or select complementary product lines to increase average order values. These resources are especially appealing to sellers on large e-commerce platforms like Walmart Marketplace and Amazon, for example. To compete on these platforms, sellers can enhance their product assortment while incurring little to no risk, increasing their average basket size and expanding cross-selling opportunities.
Wholesale distribution offers several benefits over the alternative, which is to invest in owning and warehousing inventory for direct sales. However, it is important to consider the big picture of a wholesale distributor relationship rather than focusing on a single element, such as pricing or shipping fees.
The benefits of wholesale distribution for online and retail sellers
There are several factors to consider when selecting a wholesale distribution partner.
Product assortment expansion
Sellers with access to wholesale resources can benefit from a new product assortment strategy by adding complementary lines or new categories. For example, an office supplies seller can add janitorial products, enabling school and institutional customers to increase their orders through the convenience of one-stop shopping. Sellers can easily experiment with a niche market by selecting categories and individual products from the wholesaler’s catalog to complement their assortment.
Access to off-site inventory supports an endless aisle retail concept in online and physical channels. An endless aisle is the visual representation of merchandise that complements physical inventory. End users can purchase product inventory for direct shipment, so the retailer makes the sale through drop shipping. You can reach end-users wherever they shop, with stock held and delivered by the wholesale distributor.
No-risk inventory
The wholesale distributor bears the risk of purchasing and holding inventory. The seller doesn’t own the merchandise. When a customer buys the product, the seller pays the wholesale pricing and sells to the customer at full retail price. There’s a predictable, known margin for each product sold.
Many large companies have minimum order levels that are out of reach for small businesses. The sellers can take advantage of the wholesaler’s existing supplier relationships, such as with leading manufacturers and popular brand names. The distributor meets the minimum order level and provides the seller with access to additional inventory.
It’s a low-risk way to expand product lines or try out new products. Sellers can test products in their sales channels and gauge the response without an upfront investment in unproven merchandise.
Fulfillment options
Your wholesale distributor is equipped to serve you and your customers across all order unit options, from shipping pallets or cases to your distribution center to direct-to-consumer parcel shipments.
Some resellers inventory products and handle last-mile fulfillment themselves. The alternative is drop shipping, where the wholesale distributor owns the product and ships it to the end-user only when it’s sold. Some wholesalers may offer pick-up at their facilities, depending on location.
Data integration
Many tech-savvy wholesale distributors are already integrated with your e-commerce platform or can quickly integrate to publish product content to your website. These integrations manage the two-way flow of order and shipping data for inventory, ordering, and delivery monitoring and management. You can add and remove products in your sales channels without incurring technology expenses. And it’s easy to fine-tune the product assortment to optimize margins on your top-earning products.
Service commitment
Look for a wholesale distributor that provides the services and quality you need to meet customer expectations. If part of your value proposition is fast shipping, then the distributor must commit to meeting your one- or two-day delivery timeframe.
Take the next step to growth through wholesale distribution
As the essential link from point of sale to delivery, wholesale distributors empower resellers and manufacturers to improve their customer experience, expand their product assortment and optimize their supply chain.
Connect with Essendant Wholesale Services today »