Are you looking for a free, easy, step-by-step guide on how to become a wholesale distributor?
In this simple guide, I’ll show you exactly how to get started, no technical experience required. (It’s easier and faster than you think.)
Wholesalers are the mediator between the end-users and the manufacturer, play a significant role in the sale of goods.
Being a wholesaler means that you will be directly connected with the manufacturer and get contractual authorization to sell their products to various retailers, merchants, dealers in your territory for profit.
Running a wholesale distributorship business can be very profitable and rewarding. Wholesale distributors have served an important role in the economy for the last century.
In the united states alone there are approximately 300,000 distributors, representing 7% of private industry GDP with annual revenue of $3.2 trillion.[Source: Entrepreneur].
As a result of increasing competition, distributors are struggling to retain their market share and profitability.
There’s no single method for becoming a successful wholesale distributor, but there are certain steps you should follow to become a wholesale distributor.
“Put your heart, mind, and soul into even your smallest acts. This is the secret of success.”
1. Research
Researching is often the most time-consuming part of any business. The most obvious place to do research is your targeted location, the area where you want to work.
I want you to explore how the industry works, the basic rules of a distribution business. Increase your knowledge about accounting, business administration.
You must need to develop your management skills, supply chain knowledge, and finance. Team building and leadership abilities are a must.
2. Choose Industry, Product & Market
Wholesale distribution is a very large industry there are various segments within the industry from large distributors to mid-sized distributors.
You can distribute almost anything, usually, wholesale distributors generally specialize in distributing products for an industry or a particular audience.
Research different industries and products and a make list of products and companies you are interested in.
The best way to figure out the products in your desired area is to thoroughly research your potential customers and their needs.
Choosing the right products in the industry will decide how long does it take you to be successful in the distribution business.
During the process, you’ll also need to assess your financial situation.
3. Startup Capital
Financing plays a significant role in running a business, you’ll need to have enough cash on hand to launch your business.
How much money will require depends on what products you’ll be selling and your targeted location?
Once you come up with the right products the next step is to choose a warehouse location.
Choosing a warehouse location is a significant decision that impacts every aspect of a business — finding a balance between a compatible location and a reasonable rent price.
Set up your office you will most likely need office equipment to get started. From telephone system to a computer, printer, scanner, and internet access.
Next, you’ll need to buy enough inventory to launch your business. Inventory cost will vary from a few hundred dollars to over a million dollars depends upon your products and the number of customers you want to target.
I want you to calculate exact shipping costs from the manufacturer to your warehouse, as well as from your warehouse to your customer.
Once you have all the data and have determined your final cost this will give you a good idea about how much money will it take to launch your business.
4. Choosing Warehouse Location
Deciding on a warehouse location is a very important decision and that directly impacts your business.
Favorable location can drastically increase the company’s capability to compete and effectively serve customers.
Before confirming your warehouse location go through all the available options. The things you need to consider while selecting the location.
Try to find out the location with reasonable rent prices and taxes. Pay attention to the local demographics of the state/city because workforce availability, skills, and labor costs are directly associated with local demographics.
Transportation costs and accessibility to roads and highways, especially if trucking is the main mode of transportation.
Find out the location with a reasonable distance between the manufacturing location, warehouse location, and customer.
5. Set Up Logistics
Logistics is all about delivering the product to your customers when they want it. With the right logistics planning, you’ll be able to manage your customers’ expectations.
Logistics requires a lot of planning with proper training for your team to process an order as fast as they can.
If you have proper planning, it really shouldn’t take you any longer than 24 hours to get that order out the door.
Take care of your customer’s expectations. Develop a relationship with your customers and understand what they expect.
Meet your customer expectations into your logistics planning.[Source: The balance]
6. Complete Distributor Agreement
The distributor will get a written agreement or contract with the manufacturer that defines the period for the contract, terms, and conditions of supply with the territories covered by the agreement.
This agreement will define the exclusive right to sell and distribute the Products to customers within a particular geographic region or multiple regions.
Also, the agreement will mention all the details regarding pricing and payment terms.
7. Authorizing Your Business
Visit the official site of the U.S. Small Business Administration (SBA) for licensing requirements to establish yourself as an authorized wholesale distributor.
Not every business needs to be licensed. I want you to go through the official website to find out if your product or service is one that is subject to licensing.[Source: WikiHow]
Many times obtaining a business license begins with filling out an online application form with personal and business contact information and details about the nature of your business etc…
This allows you to act as an authorized wholesale distributor to buy products wholesale from manufacturers without paying sales tax.
8. Start a Trial as a Salesman
The wholesale distribution business is all about buying and selling. You need to have good negotiation skills with sales expertise.
The concept is “Buy at a lower price (in bulk), Sell at a higher price” Industry experts feel a sales background is necessary for a distributor.
Your sales skills will determine how successful you are in your business. I want you to develop certain things like communication, active listening and many other things besides negotiation and closing.
I want you to assess yourself on what you’re doing and dedicate your time and effort to improve your sales process.
9. Build Distribution Experience
The initial few years of your wholesale distribution business may be hard for you to continue because you don’t know the market.
You don’t know how to approach retail stores to sell your products. How to convince them, how to handle inventory management, logistics and much more.
Like anything in business, you have to start from somewhere and you need to have a learning approach.
It’s a complete journey, eventually, you will learn and understand the requirements of your clients.
Develop your understanding of your target market and clients to develop a stronger relationship and connections with them.
Distribution businesses have become increasingly complex with technology to serve customers effectively, therefore, stay updated about the industry.
Conclusion
Nothing will work unless you do. It’s easy to go through a bunch of books, blog posts, guidance notes, but the fact is that these resources will help to only get you so far.
Stop reading and start taking actions your positive action combined with positive thinking results in success.
“Nothing will work unless you do.”