Managing Wholesale Business Risks – Key Practices To Follow
Wholesale business is all about buying products below their regular retail prices and selling them at higher rate. Even if you cannot sell for profit, you should be able to bring a ‘breakeven point’ in business, right?
Unfortunately, hundreds of wholesale entrepreneurs go out of this business just because they cannot relate themselves with this business model and so they are unable to protect their businesses against risks.
To avoid joining the failure squad, you must conduct research about how the wholesalers fail and what you can do to mitigate the risks.
Focus On Niche Market
The retailers usually stock products which are for everyone. However, being a wholesaler this approach means spending too much money on generalized products that may not be sold ahead for months.
In this regard, the safest bet for a wholesaler is to focus on niche market and specific product categories.
Focus On Market Transformation
In wholesale business, most of the wholesale experts advise wholesalers to buy products from stock liquidators.
However, you may forget one thing that the liquidators mostly sell those products that other resellers or even the end customers no longer want.
Keep yourself upgraded with latest market knowledge, market transformation, product trends and latest technology so that you may produce accurate demand forecasts, not leaving you with undesirable stock in hand.
Focus On Products Insurance
Damage, theft or loss to products during shipping or storage is a major risk for wholesalers. The products can either lose value in warehouse or during transit due to climate, mishandling and misplacement.
Insuring products can be a good safety measure to lessen or mitigate this risk. Several insurance plans cover merchandise against potential losses no matter where they occur.
At the same time, you must outline an extensive risk management plan for your business.
Focus On Marketing Effectiveness
Most of the wholesalers say that their marketing campaign is not effective and does not generate results so their investments have been wasted.
It causes them trouble in finding out why did it happen? Whether you spend your marketing budget reaching nobody or approaching unrelated people; both approaches can ruin your business. You can mitigate this risk by focusing on niche market.
It is because within niche, it is easy to locate and keep customers loyal to your business. It can certainly maximize your marketing effectiveness. Otherwise, you must try new marketing techniques to invite people to your business.
Focus On Safe Play
There is a common risk of wholesale suppliers providing incorrect information, products and even misleading ads online.
A company may dare not to provide products for which payment has been transferred. It is impossible to completely eliminate this risk but you can mitigate the risk yourself by researching suppliers thoroughly before placing order to them.
You must be very cautious while conducting online business transactions such as visit online review pages that can provide information on particular business transactions and blacklist wholesale companies.
You can also verify the company from different resources such as from other wholesalers, dealing in the same product category.
Risk is the most intrinsic part of doing business. Identify your business risks, analyse which risks are avoidable, how to mitigate them and how to efficiently manage them.