How to Survive Your First Year as a Wholesale Business


Congratulations! So you’ve decided to dip your toes in starting a wholesale business. I’ve assumed that you’ve gotten all the regulatory and administrative stuff out of the way. Your fledging wholesale business is now taking baby steps as an entity on its own. However, like any small business, the first few years are critical.

Here, we’ll suggest what it takes to survive your first year as a wholesale business. It’s a daunting thought but anything could happen in the four quarters of a year. Seasons, trends and political winds are shifting all the time. We advise that it’s best to stay focused on your business plan and unique value proposition above everything else.

After all, what’s going to make your wholesale business stand out from the hundreds of thousands of other small businesses out there? Firstly, start by continuously evaluating and tweaking your marketing and pricing strategy. You might even want to add drop shipping sales if it’s suitable for your product. Finally, take note of your suppliers’ performance as well and deepen relationships with the right ones.

1. Evaluate Your Marketing Strategy

Never take your eye off the essential 4Ps in your marketing mix. Always evaluate your Product, Pricing, Place and Promotion efforts. These make up your killer wholesale market strategy. We don’t suggest swinging with every sway of the market. But we do recommend that you assess your results every quarter at a minimum. It does take time for your marketing efforts to trickle down to your customers.

a. The 4Ps of the Marketing Mix

  • Product is the actual item that you’re selling. You might be a general wholesaler for sporting goods, for example. Or you might be specializing in a niche sport or hobby such as competitive fly fishing. Either way, you need to constantly ask yourself if you’re dealing with the right product for the market. Is this something that your target customers might buy?
  • Pricing is the value that you put on your product in the market. It’s a combination of the cost of the product couples, market segmentation, what the market is likely to pay and supply and demand factors. For competitive fly fishing, customers are likely to pay attention to the build quality of the fishing rods along with any high technology materials used in making them. We’ll cover more on Pricing in the next part.
  • Place refers to where your product is sold. How are your retail buyers displaying your products? Are you working with large sports chains or small sporting shops? You want to make sure that your product is seen in places where customers expect to find them. Or you could even try complementary product pairings! Just think of bundling competitive fly fishing sets with every fly fishing tour sold by travel agents.
  • Promotion describes your efforts to make your product known to the customers in the market. This traditionally includes online and offline advertising, press releases, incentives, and competitions. Today it’s common to send your product to social media influencers in exchange for a hopefully favorable review on their blog or video channel. You might want to put your competitive fly fishing lures and rods in the hands of winning fisherman.

b. How Can You Improve Your Marketing Strategy?

Here, we’ll focus on the Promotion bit. Why? I’m assuming that you don’t want to mix up your Product offering just yet as it’s fundamental to your business and value proposition. Pricing will be covered in the next part. You have little control over Place as it’s likely that your retail customers will purchase from you and then decide how best to display your products.

For Promotions, we won’t cover the obvious such as press releases, campaigns, and social media. You should have done that already at the start of your business. Gauge the success, or otherwise, of your promotions by looking at online metrics such as the open rate and click-through rate for emails and advertisements tied to each marketing campaign.

However, for the first year of your wholesale business, we suggest that you ramp up your B2B sales. This is a step up from your usual marketing efforts as your customers and buyers are a very targeted and knowledgeable group. But short of joining a B2B forum or marketplace, or building your own B2B portal, how exactly do you get started with B2B marketing on a first-year budget?

Inventory management software, such as EMERGE App, offers a built-in B2B portal for free. You create purchasing accounts along with custom price lists for your best customers. They login to EMERGE Cart and browse a product catalog made for them. Just like online shopping, they add their purchases to a shopping cart and checkout 24/7. Their orders then appear in EMERGE App as sales orders. How easy is that?

2. Tweak Your Pricing Strategy

We covered Pricing in our extensive blog post about the use of psychology in setting prices. Pricing is the next most important factor after your Product. After all, you do need a Product first before you can price it! Most importantly, changing the price of your product has a direct impact on your profit margins. However, you do need to be conscious of how much can the market bear before they turn to substitutes or competing products.

a. Introduce Tiered Pricing

One way to tweak your pricing strategy is to introduce tiered pricing. What does this mean? This means the more a customer purchases, the lower the unit price. This is especially so in the wholesale business where your customers are predominantly businesses or retailers that purchase things in bulk. The more they buy, the more they save.

For example, back to the competitive fly fishing example:

  • 1000 units of fishing lures at $5 per unit
  • 500 units of fishing lures at $7 per unit
  • 100 units of fishing lures at $9 per unit

The effect of tiered pricing is to encourage larger orders from your customers. They receive a discount on the unit price when they buy more from you. From the customer’s point of view, it makes little economic sense to purchase 4 x 100 units of fishing lures over a period of time when 500 units can be bought upfront for a discount!

Another nice effect of tiered pricing is that you turn over your inventory faster. Moving larger quantities converts your cash tied up in your inventory quickly. And you may enjoy more favorable credit terms and MOQ from your suppliers. After all, holding excessive inventory means bearing all the risks and expenses of carrying costs as well.

b. How Do I Implement Tiered Pricing?

This is a good reason to invest in an inventory management solution such as EMERGE App. It may be possible to do tiered pricing lists with spreadsheets. But you’ll quickly realise that you cannot scale it with all the customer orders coming it. The end effect will be manual processing of sales orders using spreadsheet software. This isn’t time-saving or an efficient way of working.

To apply a tiered pricing list in EMERGE App, you start by choosing the customer. You then pick the products and define the quantity tiers. For each each you can specify the percentage discount enjoyed or set a specific price. Time-saving tricks include applying the tiers to others products, and applying the price list to the customer’s EMERGE Cart B2B account.

3. Consider Drop Shipping Sales

Drop shipping is a supply chain management method where you do not keep stock. Instead, you pass all of your sales orders to the manufacturer or supplier. They then ship the goods directly to the customer. This way you get to enjoy the comparative advantage of lower-cost prices in one country and sell your goods at a higher price in another country.

We would emphasize that there’s a caveat here. Not all goods are suitable for drop shipping. Generally, mass-produced generic goods from, say, Alibaba, are best for this business model. Drop shipping won’t work if your goods have a brand or intellectual property owned by someone else. They’re likely to be branded as counterfeits or knock offs. Also, perishable, fragile and extremely heavy goods work against them being shipped around the world.

As you can guess by now, drop shipping lends itself to high volume, low margin goods. Think mobile phone cases, screen protectors and power banks. On the flip side, there’s little or no risk to you as a wholesaler. You pass on the risk of fulfilling the goods to the supplier or manufacturer. And little or no capital is needed to try drop shipping if it’s suitable for your product mix.

Here, we suggest that you don’t adopt an all-or-nothing approach to drop shipping. It’s likely to complement whatever product mix that you have in your sales catalog. For our fly fishing example, your high tech fly fishing rods and reels are not likely to be drop shipped. But you can drop ship complementary items such as rain jackets, wading boots, hats, sunglasses, and day packs.

4. Assess Your Suppliers

In your first year of business as a wholesaler, you would have no doubt lined up your initial suppliers. You most certainly would have received your first shipment from them. And you might be on to your second or third shipment if your goods are moving quickly! Use every shipment to continuously assess the suppliers that you work with.

Ask yourself the following five questions:

a. Did your first shipment match the design and quality of the earlier samples?

b. Did they ship goods that match the quantity and specifications of your order?

c. What was the actual lead time from the time you placed the order to the time you received it in your warehouse?

d. How responsive was their communication throughout the whole ordering process?

e. If you encountered problems, how would you rate their reply and sincereness to your issue?

Of course, suppliers that fail points (a) and (b) should be switched immediately. There’s very little point in continuing a business relationship if your supplier or manufacturer cannot deliver the goods that you expect and specified. Point (c) should give you an idea of the typical lead time should you have to replenish your inventory at the reorder level. Finally, (e) is indicative of the customer service you can expect to receive when things go wrong.

5. Deepen Relationship With Suppliers

Once you have a shortlist of suppliers that can deliver within expectations, it’s time to start developing those business relationships. Why should you do this? Because you want to enjoy better credit terms and a lower MOQ. Remember that MOQ is the minimum business that suppliers expect from a buyer. If you’re likely to be a long-term, repeat buyer then the supplier may reduce the MOQ. This means less money tied up in purchasing stock and lower holding costs with smaller orders.

Another reason to work closely with good suppliers is a competitive advantage. As a wholesaler, it’s likely that your competitors are purchasing from them as well. So, aside from the amount of business to the supplier, what makes you different from your competitor? If you make the effort to lift the business veil and even visit your suppliers one day, a human face will a difference when you urgently need a shipment.

Your ultimate aim of working with a select group of suppliers is to lower your per-unit purchase costs. Like your marketing pricing strategy, your suppliers may have tiered pricing and discounts for their best customers. If you show that you’re not a one-off purchaser or simply one that looks for the lower price wherever possible, you may make it into their favored customer list with specials and discounts.


There’s no escaping the fact that running a small business is tough. It’s a fact that many small businesses fail. But you can improve and enhance your chances of success in the first year of your wholesale business. Just remember to evaluate your marketing strategy regularly. And consider broadening your sales channels to include B2B and drop shipping sales. Finally, get into your supplier’s good books to enjoy lower costs and MOQ.

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