Is Selling Wholesale Worth it?

Posted by Lauren Thompson on May 10, 2022 5:50:52 PM

Wholesale today looks very different to the way it did 15 or 20 years ago. Where once trade shows reigned supreme, or you needed to work with a wholesale distributor to make connections, today more people are connecting and finding their audiences via online marketplaces and social media. 

 

 

So if you’re already selling direct to consumer, is selling wholesale worth it? Let’s explore the benefits of selling wholesale, and see whether it appeals to your business model.

Increased exposure without the cost

When selling directly to consumers, it may be that you rely heavily on marketing to grow and reach new audiences. Even ‘free’ marketing takes time, which comes at an opportunity cost. Tasks like content and community management, email marketing, and setting up paid ads, can be a challenge to juggle alongside sales, product creation, and packing orders if you don’t have a team.

Selling wholesale requires much less on the marketing front. Your existing marketing copy and assets are reusable here, to give retailers a feel for whether your brand is the right fit for their store and customer base. The real benefit for your business is that by selling wholesale to retailers across the country (or even around the world), you’re reaching customers and locations you may never have otherwise been able to, simply by having a presence in other stores, both physical and online. You might even be surprised by the direction your business expands, and where you manage to gain traction.

Looking more closely at the numbers, CREOATE takes a commission of 0-20% of the listed wholesale cost, with the exact percentage depending on whether it’s an order from a new customer, a repeat customer, or a referred customer. Let’s say your cost of acquisition is around 30% of the price of your average product, these are the margins we’d recommend you leave for retailers to stay competitive in your sector:

Category Suggested margin for retailers (minimum)
Beauty and wellbeing  35 – 40%
Homeware and home decor 45 – 50%
Kids clothing and items 50 – 60%
Stationery 45 – 55%
Fashion and accessories 45 – 55%
Pet accessories 30 – 40%
Food and drink 30 – 40%

Quality exposure of the kind you get from selling wholesale quantities means you’re able to shift a portion of your marketing and customer acquisition costs to retailers. Once you’ve set up shop on a wholesale marketplace, you can mostly leave your shop to tick along and bring in a passive income. Meanwhile, you can spend more time focusing your efforts and finances on other areas of your business.

New market? No problem

Have you been thinking about expanding your business overseas? With wholesale, you can do just that. The best part is that doing so requires less risk and investment on your part. Of course, this will vary depending on your niche, as founder Jennifer Tice of natural skincare brand, Evolve Botanica explains:

‘Skincare going across borders is a whole different beast. There are so many specific regulations regarding how each country handles what is accepted, what products are allowed, and how you have to have your labels done. You really have to learn what those very specific retail challenges are from both the retailers, and for yourself as you’re exporting that product into different countries. It’s not just on you to understand what you need to do — you have to educate your buyers on the processes they have to go through when they’re importing skincare products into their country, too. It’s definitely the biggest challenge for our industry.’

Once you’ve got to grips with any regulations or standards you need to meet in order to expand business overseas, connecting with existing retailers in the territories you plan to sell to can help reduce your initial setup costs. With a presence in other markets via the wholesale route, you can use this as a test run to determine whether the payoff is worth the greater investment of selling direct to these markets.

If there’s an appetite for your products here worth cashing in on, wholesale experience means you won’t be going in cold. Ride the exposure and use it to leverage your international marketing strategy.

Make progress through partnerships

Wholesale partnerships with established retailers can be so beneficial for your business. Word of mouth is the most simple, yet easily the most effective way to get your name out there. 

A positive experience and partnership with one retailer can lead to further opportunities with similar ones. Leverage your partnerships here by offering exclusive offers. For the right retailer, exclusive product partnerships can appeal to particularly responsive consumer bases.

Sell larger quantities, lower production costs

By increasing your production quantities for wholesale, it’s possible to lower your manufacturing costs. This will require research on your part, and a streamlining of production processes. 

However, done correctly, this can increase your profit margin in the long run, allowing you to reinvest in your business.

Wholesale as a market buffer

When selling direct to consumer, economic downturns and market shifts can hit you hard and fast. The cost of living crisis is the perfect example of this. With many households struggling to make ends meet to cover basic necessities, the fallout is being felt by many small businesses as consumer spending decreases across the board.

As a small business, selling wholesale volumes alongside your traditional retail model can help weather more turbulent times. Wholesale can act as a buffer, as such shifts take time to work their way up the chain. While the wholesale market isn’t immune to these changes, the delayed feedback can offer some level of financial cushioning for your business.

The many benefits of selling wholesale

Selling wholesale is a mutually beneficial process. Retailers receive new collections and product lines to enrich their stores and entice new customers, saving on the cost of product research and development. Meanwhile, brands gain exposure through broader, pre-established customer bases, cutting marketing costs, and potentially boosting sales and profit long-term. This, in turn, can help grow your brand by shifting more product, while you get more time to focus on the important bits.

As with anything, there’s work to be done before you reap the benefits. Setting your pricing strategy, among other things. At CREOATE, we aim to simplify the process by helping you connect with over 60,000 retailers across the UK, US, Canada, and Europe. With simple tools, communication, and security of trading through our easy-to-use platform, there’s no limit to your wholesale ambitions. Register to sell wholesale with us today.

Tags: Selling Wholesale


Lauren Thompson

Written by Lauren Thompson





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