Top 10 New Year’s Resolutions for Wholesalers in 2019: Drop Those Bad Habits from 2018
It’s that time of the year again! You sang Auld Lang Syne until your voice was hoarse. And you might still be shaking off a hangover and wondering where on earth did 2018 go. Well, today is the day to take stock of what you did right, and what went wrong, in 2018.
Here’s our checklist of what your wholesale or distribution business should do in 2019.
1. Start By Using Technology
We cannot stress the importance of this point enough. Are you still using paper-and-pencil records or spreadsheets to run your wholesale and distribution business? It might have worked for your grandparents and your parents, but it’s a whole new ballgame in this day and age. Technology can give you a competitive edge. Use and embrace it.
If you’re still not convinced about using inventory management software, then perhaps the benefits might sway you over. As the leader, you need to distill the importance of technology from top-down. If your employees are reluctant to change their ways, then demonstrate how barcode scanning, for example, can save them from repetition and mistakes.
2. Be Agile and Mobile
There’s no question that today’s smartphones and tablets contain far more computing power than what sat on desks back in the 1980s and 1990s. The “always on” nature of mobile devices coupled together with Wi-Fi and the mobile Internet means that business computing can be done anytime and anywhere across different time zones.
Being agile means using a cloud application that you and your employees can access from any web browser. This added mobility means that work need not be confined to bulky desktops or laptops in the office. And there’s pesky no software to install, setup or maintain. The focus suddenly is on getting work done and not navigating a clunky operating system.
3. Source Sensibly and Sustainably
Trade wars are messing up the world’s economies. Perhaps it’s time to take stock of the situation, sit back and reassess the suppliers that you deal with. If your products are hit by tariffs, start looking for alternative suppliers in other countries. Or follow your savvy suppliers and manufacturers as they open production lines in another country.
Just like looking for suppliers and manufacturers in China, you may have to apply the same principles and common sense in evaluating business partners. South-East Asian nations such as Malaysia, Vietnam, and the Philippines are ready with substitutes or alternative suppliers. Highly developed nations such as South Korea and Taiwan may fill in the technology gap.
4. Go Forth with International Trade
There’s no question that international trade waters are far choppier than ever before. Historically low shipping rates are slowing creeping back up. Tit-for-tat tariffs and an era of protectionism means that wholesalers and distributors need to tread carefully. However, it’s not all doom and gloom if you’re intent on expanding your markets.
For import-export companies, you need to have your operations down pat with sophisticated inventory management software to back you up. You need to be able to juggle multiple currencies and generate documents in different languages. Better still, save time by having the software automatically calculate landed costs or CBM, for example.
5. Take Control of Wholesale
Wholesalers and distributors don’t necessarily need to remain being squeezed between manufacturers, suppliers, and retailers. Work smarter and faster beyond offering low prices on razor thin margins. Consider taking back some control of your business by finding the right customers, being a good business partner and developing your wholesale brand.
The key is to make it harder for your customers to switch wholesalers or distributors. No one likes to start building another business relationship from scratch again. Or to start at ground zero for favorable wholesale pricing. Make it memorable (for the right reasons!) for customers to deal with you. Repeat purchases beat finding new customers any time.
6. Up Your Wholesale Sales
Driving your sales is the next priority beyond establishing your wholesale brand and market positioning. Besides growing your customer base and finding new markets, how do you get your existing customers to buy more from you? Ramp up your customer service for a start. Then take advantage of human psychology to get customers to spend more with you.
In the cut-throat wholesale and distribution industry, there’s actually very little to distinguish you from your competitors. You might be selling similar or identical things. Prices are a differentiating factor but margins are extremely slim. So it all boils down to business relationships and customer service.
We’ve always been advocates of delivering exceptional service that surprises and delights your customers. After all, how much technology or investment does it take to break into a wholesome smile or deliver a cheery hello on the phone? Tailor custom price lists just for regular customers. Make it easier for them to buy from you 24/7.
Over time you’re in control of the business relationship. You can set a minimum order quantity (MOQ) to drive sales. This means you are putting your business expectations on the table. You’re telling customers that this is the smallest order that you will entertain so that they can enjoy your favorable wholesale pricing.
7. Value Your Inventory
You’ve tied up money in your stock of goods and you need to convert them to cash by selling them. How fast you sell or turn them over impacts your cash flow situation. And we all know what happens when your business is constricted by cash despite generating healthy profits. Your stocks are valuable so treat them as such.
Take a look at how you’re managing your inventory for a start. You should be using the globally popular and accepted FIFO system that is supported by most software. FIFO follows business logic that you sell your oldest stock first. This is very true for perishables and goods affected by the shifting winds of change in fashion, taste, and technology.
FIFO is also a costing method that values your inventory at their most recent costs. From an accounting point of view, your ending inventory is valued higher because prices rise over time (they usually do because of inflation). Your COGS is lower because it is based on cheaper, earlier costs. This produces more gross profit and a higher taxable income.
8. Spring Clean Your Warehouse
Just like cleaning out your dusty wardrobe every now and then, you also need to take stock of your warehouse and take a look at it with a fresh pair of eyes. It’s too easy to overlook the place where your operations and warehouse staff work. Could you make better use of the rented space? Can it be a more productive, welcoming and safer place for your workers?
Like stock takes, you should audit and assess your warehouse on a yearly basis at a minimum. While the star performers in your sales team deserve attention, the same could be said of taking care of your warehouse staff and their environment. Keep workers happy and they’ll pick and pack with care and accuracy, and fulfill orders quickly.
9. Benchmark Your Business
After applying all the business tips and workflow improvements in the book, just how well is your business doing? How are you doing compared with your previous years, your competitors and your industry? While common inventory ratios don’t necessarily present a complete picture of your business’ health, it’s handy to highlight areas where you could improve.
There are two ratios, however, that we think are critical for any business. Firstly, the inventory turnover ratio measures how efficient you are in converting your stock to cash. In other words, how fast you’re selling your stock in a period of time before you need to re-order more and stock up. Keep an eye on this metric to avoid a deadstock situation.
A second ratio is the order fill rate. This is a gauge of how well are you completely fulfilling customer orders. Indirectly, it’s a measure of customer satisfaction as well. Like any customer, I’m sure you would be irate if parts of your purchase orders cannot be delivered. Maintain a high fill rate and you’ll maintain customer happiness as well.
10. Forecast the Future
You don’t need to consult a fortune teller to gauge the year ahead. Nor do you have to make sense of riddles or decipher tea leaves or animal bones. Start the year on the right foot and with the right attitude, and the rest of the year will follow. Begin by making better sales forecasts and purchases, thus avoiding tying up valuable cash in stock.
Overstocked situations aren’t your only real worry. There are also stockout scenarios which might be a cause of envy. But this means lost sales, long re-stocking times and frustrated customers who are likely to put their orders with your competitors. Don’t lose your regular customers by establishing a sufficient safety stock level.
You also need to be aware of seasonal effects on your inventory. The changes in weather seasons, holidays, festivals and large-scale events can play havoc with your inventory. Order as much as you need by looking at historical sales. Or take advantage of the situation by stocking up in anticipation when these seasonal factors happen.
11. Start A New Business
Hang on! I thought you said you had 10 New Year’s resolutions? Well, we did. But we couldn’t help sneaking in this one. It’s especially for those who have been sitting on the fence the past year. We’ve had countless new users ask us: “When’s the best time to start a new business?” Our straight answer is “Any time.” Don’t wait.
It’s up to YOU to make it happen. There’s no timing the market. But we don’t suggest that you quit your day job and dive headfirst into the unknown. Grow it as a side business first before you can confidently call it your own. For creative makers and doers, selling what you make at online marketplaces like Etsy is a logical first step.
For others, doing something more ambitious by wholesaling or distributing a product needs a lot more homework. The stakes are higher and the potential for losses are real. Like any startup, begin with a business plan and your unique value proposition. And be sure to avoid making these common mistakes when your newfound business chugs along.
If you’re considering importing stuff to sell, dip your toes carefully into chippy international waters with our first-timer importing guide. Be aware that the existing climate of protectionism and tariffs doesn’t bode well for importers. And you still need to put your heart and considerable footwork into finding dependable overseas suppliers.
Above all, set a time frame for your fledgling business to make a running start until it takes flight. We suggest that you give it 30 days, whether you’re working on it full-time or part-time. This will give you an idea of whether your products or business value proposition has an audience. If it doesn’t, eat humble pie, re-pivot and move on.
It’s time to lay those bad habits from 2018 to rest. The last year went by quickly and I’m sure you remember the highs and lows of running your business. And what worked for you and what didn’t. Just be sure to not repeat what went wrong. Embrace new opportunities with a fresh pair of eyes and our list of top ten New Year’s resolutions.