7 Ways To Run A Successful Wholesale Distribution Business - Financial news

7 Ways To Run A Successful Wholesale Distribution Business

What could make a successful wholesale distribution business now and beyond? Attributes such as good inventory handling and excellent relationships with customers still stand. However, using technology to provide ease and convenience is the new norm.

If you run a wholesale distribution business, you know that order volumes are huge and need to be fulfilled as soon as possible. This means that your own backend system for inventory control must be foolproof. By building into your business those features that give your customers the convenience they want, you can ensure long-term success.

Few ways to handle your wholesale distribution business successfully

Keep Inventory Under Control And Automate

There are several aspects of successful inventory management, the first of which is maintaining just enough stock to do business. As a wholesale distributor, it may seem logical to stock up more to fulfill orders. Compared to pure retail business, this may be true in terms of volume.

wholesale distribution warehouse

wholesale distribution warehouse

However, more stock and more volume are often not the same things. While you may be buying and selling greater stock volumes, it is still important not to stock more than you need. Inventory calculations such as lead time, reorder level and safety stock apply to wholesale distribution as well. Ensuring you have no dead stock can in itself help you turn a profit.

The second aspect of inventory control is the ‘how’ of it. While you may be keen to use spreadsheets to track inventory, this is not ideal, especially when you have large volumes of stock moving around. An accurate view of your inventory can help prevent stock losses and misplaced orders. To do this, it is recommended that you use a good inventory management system. It can help you track your orders across channels much more effectively and keep a close eye on stock movement.

The Case For Automation

You can use inventory management software to synchronize all your orders across wholesale and retail channels. Software products can also track the status of each order until delivery, returns and replacements. The second benefit of automating inventory management is the automated raising of purchase orders.

For example, you may receive an order for a hundred products outside of business hours, driving your inventory levels very low. If you were to set reorder levels and lead times for each of your products, and inventory management system can automatically send out a purchase order to your vendors.

The second benefit of automating inventory management is the automated raising of purchase orders. For example, you may receive an order for a hundred products outside of business hours, driving your inventory levels very low. If you were to set reorder levels and lead times for each of your products, and inventory management system can automatically send out a purchase order to your vendors.

Use B2B E-commerce To Your Advantage

More than half of all B2B retailers say that a third of their sales come from online channels. Why should you fall behind?

E-commerce for B2B sales may not seem like the best idea. But in the digital age, it is growing at a hitherto unprecedented rate. Let’s not deny it- it is simply easier to buy things online, as we have seen in the growth of E-commerce in every possible retail sub-sector. B2B customers also feel this way, and an increasing number of buyers are shifting

B2B customers also feel this way, and an increasing number of buyers are shifting to their wholesale distributor’s website to make purchases of larger volumes. Secure transactions, a digital trail and the ease of browsing and buying products on an e-commerce store drive sales here.

If you haven’t already, now is the time to set up an e-commerce page that can handle large order volumes and also provides detailed descriptions that your target buyers will find useful.

Train Your Staff

Theft isn’t the only way by which an employee can harm your business. In fact, some of them may do so simply by not being trained enough.

wholesale distribution training

wholesale distribution training


As a wholesale distributor, it is imperative that your team be characterized not by size but by skill. Digital transformation calls for adaptability within your business. You have probably made the choice to move to an inventory management system, but do the key personnel in your team understand how it works? Further, are they in a position to train their respective teams to work with the system?

Another aspect of staffing in wholesale distribution is the number of contract workers you may have. Market estimates stand at 40% of the total workforce. In other words, nearly half of your employees from security personnel to warehouse staff are in flux all the time.

Do you have training programs and Standard Operating Procedures in place to help guide these people? It matters that the people handling your stock and keeping an eye on it see the bigger picture as clearly as you do.

Don’t Use Price To Compete

As a wholesale retailer, you can offer excellent discounts on products that make your offering more lucrative. However, in today’s intensely competitive B2B sales environment, competing on price can prove risky and it is only a matter of time before someone else comes along with better discounts.

Instead of reducing your price offering, compete on customer service and satisfaction. If you promise a delivery timeline of ten days, aim to deliver within seven. Keep your order history on the track and send alerts to your buyers periodically to make repeat purchases from you. Many wholesale distributors are leveraging email marketing to achieve this connection with their buyers.

Needless to say, ensure that you only sell products of the highest quality- you can gauge this by the number of returns you receive from an order. If you can build trust, in your product and your service, customers will keep coming back to you even if there are relatively cheaper alternatives available elsewhere.

Be On Top Of Your Cash Flow

Free cash flow is the basis of any good retail business, more so for a wholesale business where order sizes and prices are quite significant. Wholesalers often feel compelled to offer extended credit to their consumers. While credit and the practice of extending it to vendors are quite common in wholesale distribution, avoid falling into the overextension trap.

wholesale distribution cash flow

wholesale distribution cash flow

Set limits on how long a buyer’s credit period can extend. You can calculate this based on your estimated free cash flow for the next quarter or so. Calculate how much cash in hand you would need to continue fulfilling orders and procuring inventory. Set a credit limit, both in terms of time and money, based on these calculations.

Communicate clearly to your buyers that your credit terms are set in stone, and further orders will only be fulfilled once the accumulated credit is settled. While it may seem like a draconian approach to take to cash flow, not having enough working capital can drive you out of business, so it is important to follow through on your terms.

Rethink Your Order Fulfilment

How long does it take for you to fulfill an order if you already have inventory on hand? Several retailers today are able to ship an order out in less than 24 hours, setting standards for others to follow. Even in wholesale distribution where volumes are large, you can ship products out quickly if you have a process in place to do so.

First, digitize your order fulfillment. This way, you don’t have to manually write out and process each order at every stage. Ideally, once you receive an order, your warehouse personnel must receive an immediate update and should begin processing the order. Using technology makes this possible, even if your warehouses are spread across locations.

Then, consolidate your B2B sales from different channels. You may have an e-commerce B2B page as well as a field sales channel. Consolidate inventory across both channels so that you always have enough stock to actually fulfill an order.

A second approach that works for many in the industry is the use of back-ordering. If some products in your catalog have a short lead time, it is a sensible choice to only order those products into your inventory when you actually have an order for them. This way, you save on working capital. You can also consider drop shipping to help reduce the order fulfillment time.

Retailers increasingly find that their own customers expect faster order fulfillment. So, they look to you to fulfill their orders faster so they can keep up.

Build Relationships With Customers

Wholesale Distribution Customer Relations

Wholesale Distribution Customer Relations

Lasting relationships mean lasting business. Hence, focus on building relationships. Ensure that you maintain transparency at all times. Communicate with your customers about new products and offers on B2B purchases. If your policies have changed, ensure that a written update goes out to all customers.

Use email marketing to your advantage like several other wholesale distributors already do. A simple newsletter that provides useful information every month can build recall value. Be sure to track your customer outreach efforts to see what works.

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