Wednesday, December 2, 2009

Understanding and Creating Relationships with Wholesalers for More Profitable Product Sourcing by Worldwide Brands

Article by Worldwide Brands - this is a series of 14 blog posts providing information on how to find inventory and products to sell on eBay from wholesalers with Worldwide Brands and their Product Sourcing Tool for eBay.

Article #8 - Understanding Wholesalers

eBay beginners and PowerSellers who make money from selling products regularly on eBay need to understand wholesalers. To grow your business, you need excellent relationships with wholesalers that support you as an online retailer and understand the requirements of customers, and eBay, in delivering an awesome buying experience.

Like you, wholesalers are in business to make money. They have to take big risks to ensure continuity of product supply. The wholesaler is, of course, not the manufacturer. Manufacturers may sell directly to some huge retail buyers like Wal*Mart, Target, etc...but a manufacturer does not sell directly to a retailer. Manufacturers like to manufacture in large quantities and ship in bulk container loads to a limited number of big volume buyers. Manufacturers select wholesalers in different locations who will buy in bulk from them, store the inventory, and manage the sale of goods to hundreds and thousands of retailers who buy in large, medium and small quantities.

Wholesalers take risks in holding inventory. So how does the wholesaler make money? Wholesalers who beat the following challenges remain in business:

  • Fast inventory turn
    Wholesalers who receive inventory and turn it into orders rapidly can make money. The best cash flow option for the wholesaler is to sell the entire inventory of a product and receive payment from retailers before the wholesaler has to pay the manufacturer.
  • High volume transactions to build profits
    Typically, wholesalers don’t make a large profit margin per item. So they need to sell a lot of items. With more items sold, cumulatively they make more profit.
  • Keep operating costs to a minimum
    Wholesalers need to ship large volumes of product without getting involved in complex handling, packaging, shipping and billing issues. Wholesalers keep staff levels to a minimum so you typically cannot expect wholesaler personnel to spend hours supporting any retailer. Retailers must know what they want, know what they’re doing, must place orders, and get on with selling without making demands on the wholesaler.
  • Manage the Manufacturer’s Brands
    Manufacturers require that wholesalers protect the integrity of their brands. If a manufacturer makes a high quality product, with higher prices and good margins, the manufacturer requires its wholesaler to be discriminating about who can sell that brand, and how the wholesaler prices the brand to its retailers. Sometimes a wholesaler is not allowed to sell a brand to an online retailer because of the threat of price wars on the Internet that can drag down the perception of the brand as a quality and expensive range of products.
  • Manufacturers have their own Language
    If you want to communicate well with a wholesaler, you need to know their own language – the shorthand of wholesale transactions. Wholesalers use words like: MSRP, FOB, etc. If you are not familiar with these terms, eBay has been running a Blog sequence that explains each one. It’s worth your while to review this series of twenty common wholesale terms.

Why is all this important to eBay Selling?
You need an excellent relationship with your wholesale sales representative. The sales representative can make or break your success selling their brands. eBay Sellers with good relationships have sales representatives tip them off to new products to sell well in eBay Auctions or through eBay Stores. If your wholesale sales representative likes you, and your volume of business, they might tip you off early to special deals with great pricing. If the manufacturer, or wholesaler, decides to offer promotional specials, you need your wholesale sales representative to let you know quickly.

You can only build a relationship like this if you understand how your wholesaler operates. The online retailer must always act swiftly and always in a professional manner.

eBay Educational Support
One of the applications now available in Selling Manager Applications (check out your “My eBay" and look for a new tab labeled "Applications") is the Worldwide Brands Product Sourcing Tool.

The Worldwide Brands Product Sourcing Tool contains a wholesaler database, education modults and education series called: “The Whole $ale.” This series has many chapters to coach eBay Sellers on best practices in working with wholesalers. Sign up for either eBay Selling Manager or eBay Selling Manager Pro and you can then access the Selling Manager Applications directory and the Worldwide Brands Product Sourcing Tool.

Check out Worldwide Brands Product Sourcing Tool for eBay today! A 7 Day Free Trial is available.

Worldwide Brands is an eBay Certified Solution Provider, providing product sourcing access and information for eBay sellers. They are the publishers of an extensive directory of legitimate, fully-verified ecommerce wholesalers and manufacturers.

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