Challenges every wholesaler facesEvery business, at its core, is looking to do the same thing: minimize costs and maximize profits. Operating a wholesale business comes with its own unique set of challenges to achieve those goals. When it comes to wholesale distributors, they face the unique problem of becoming irrelevant in the supply chain — that is, unless they adapt. Whether you’re looking to run a wholesale business using Shopify or are researching wholesale product sourcing strategies, you need to understand the challenges wholesalers face while fighting to maintain relevance. This article will explain how to overcome them.


1. Financial pressure from both sides

Retailers and manufacturers are increasingly streamlining the ordering and shipping process to cut out the middleman — and oops, that middleman is you. This happens because retailers want to save money, and manufacturers want to make more money. The easiest way to do that is to cut out a link in the chain.

As a short-term solution, many wholesalers decrease their prices, and therefore their profits. This will keep retailers around for a little longer, but presents its own challenges. It’s hard to increase your prices again after you’ve decreased them, and engaging in a race to the bottom is never going to get you anywhere.

To really combat this problem, you have to ask yourself: What am I offering besides good prices? If my prices are comparable to other sellers on the market, how am I adding value in other ways?

Wholesalers already offer a huge benefit to manufacturers by taking care of logistics, shipping, and delivery of the product, and to retailers by taking advantage of large orders to get cheaper prices. However, manufacturers are increasingly investing in logistics and shipping, charging a higher price, and still making enough profit — while retailers are finding these manufacturers and skipping the wholesale step.

To win back, or keep from losing, those retail customers, you need to think about what you can offer them that will incentivize them to stay, even if they’re paying more money. A popular solution at the moment is to offer an automated inventory system that tracks inventory in real-time and automatically sends alerts when stock falls below a predetermined level.


2. Shipping products quickly and accurately

Retailers are facing consumers with Amazon-level standards when it comes to shipping quickly and accurately, and they are now passing on those demands to their wholesale distributors. A late or inaccurate order from a wholesaler will not only lose them the retailer’s business, but it can even lose the wholesaler money if they have to pay a fee. In other words, wholesalers are expected to provide even better service and faster shipping for even lower prices. Meeting all of those expectations is one of the biggest challenges for wholesalers today.

Thankfully, focusing on accuracy and speed can be another value-add, as discussed above. If you build yourself a stellar reputation based on your deliveries always being fast and accurate, that will be a selling point for retailers.

Additionally, investing in technology is a must. Order fulfillment software can generate barcodes for each item, and providing employees with barcode scanners means that they can scan the package at multiple points in the picking and packing process to cut down dramatically on errors. Not only does emphasizing accuracy save you time and money, but implementing pick and pack best practices will do wonders for the efficiency of your warehouse. Ultimately, make sure your warehouse is set up to support the ever-increasing demands of fast and accurate shipping.


3. Real-Time Inventory Management

Real-time inventory management is indeed a solution to increasing demands from both retailers and manufacturers, but it comes with its own problems. As both sides demand access to real-time inventory information, wholesalers are left to figure out how to implement it without breaking the bank. Manual counting is basically out of the question, and RFID chips are incredibly expensive. What to do?

While the cost and time savings of investing in RFID chips is often not worth it, it is absolutely worth investing in a real-time inventory management. This means not just giving your employees and customers access to real-time inventory data, but also using it to allow your customers to be taken to individualized portals with pricing data that is specific to them, so that they can make orders whenever they want. Of course, that order will update your inventory (in real time, because what other way is there?).


Sticking Around

Again, like all business, adapting is not an option; it’s a way of life. Wholesalers are facing many unique challenges as shipping times and demands increase, and profits only seem to decrease. Instead of looking at short-term solutions like lowering prices, wholesalers need to focus on long-term, adaptive strategies to keep winning business from both sides and earning their spot in the supply chain.


About the Author: Jake Rheude is the Director of Marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse that was born out of eCommerce. He has years of experience in eCommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.

Ecommerce Product Sourcing Strategies for Every Business Model
Ecommerce Product Sourcing Strategies for Every Business Model

Product sourcing is where skill and talent come together for online retail. But like any other skill, you’ll perform better with proper training and instruction. Here, we cover the best and most practical advice on product sourcing for the 8 most common business models.

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