Market Expansion: A Guide to Selling Wholesale

LearnJuly 19, 20216 min read
Caroline Lu, Product Marketing Manager

What exactly is selling wholesale?

Selling wholesale is the process of selling a company’s products in large quantities to a third-party retailer or distributor, typically at a discounted price. That third-party company will then turn around and sell those products to customers. While the company is still able to sell its products directly to customers, this shift in distribution has a massive impact on the way that companies operate and distribute their products.

For most consumer brands, there are two types of wholesale: brick-and-mortar and online.

Brick-and-Mortar Wholesale

Wholesale by way of brick-and-mortar is the process of selling products to a third-party who then sells them in person on your behalf. An easy example is a department store. Say you run a skincare company. If you sell high volumes of your product to a department store and they put it on their shelves, you’re doing brick-and-mortar wholesale.

Oftentimes brick-and-mortar wholesale involves the use of additional distributors. These are companies who buy your product first and then sell it to the retailer.

Online Wholesale

Platforms like Amazon, eBay, and Wayfair are considered online wholesalers. This is because companies sell their products to these sites to be hosted on them and distributed directly to consumers. Companies like Amazon offer various ways to distribute and send products directly to consumers, but for all intents and purposes, they are wholesalers. A customer visits Amazon to buy another brand’s products.

Why should a company sell wholesale?

“Wholesale” isn’t the most glamorous of words. It evokes ideas of large shipping boxes, dusty warehouses, and impersonal sales. Especially for small businesses who pride themselves on high-quality, hand-crafted products, wholesale can feel like a far (and expensive!) reach. As businesses grow, they need strong profit margins on every sale; the idea of sacrificing part of your revenue in order to pay a wholesaler might feel wayward.

However, there are many benefits to going wholesale that can make up for potential shortcomings. Here are a few:

1. Increased sales with decreased marketing

When you sell your product in a store or on an online retail platform, much of the marketing is handled by the wholesaler themselves. Department stores, for example, will offer promotions and advertising to get foot traffic into the mall on your behalf. This can greatly increase your sales without upping your marketing spend.

When you sell direct-to-consumer, you are single-handedly responsible for each sale.

2. Shared branding and networks

Selling wholesale means your product gets swept into the stream of other brands — and that can be a very good thing. When a consumer visits Amazon, for example, they’re able to compare the benefits of your product directly to competing products. You are able to access other brands’ audiences, and potentially convert customers.

3. New markets with low overhead

Especially for online platforms, using a wholesaler provides the opportunity to enter a new market that you couldn’t have done alone. Many startups leverage wholesalers to expand domestically or internationally for the first time. It’s less risky and less expensive to try out new regions with a wholesaler than it would be to go it alone.

4. Big orders, consistently

When a third-party retailer buys your products, they will likely do so in large quantities, or in bulk. Larger orders means more revenue for the company. This creates a system in which the company generally makes much larger amounts of money on a regular basis and has a higher production output. Even if the per-product price is lower than selling directly to the customer, the increased volume can make up for any potentially lost product margins.

How to Start Selling Wholesale

Selling wholesale can actually be a simple process to begin. Although doing so does require a good grasp of logistics and distribution, online platforms like Amazon and eBay make it easy.

Selling on Amazon

Amazon provides a large number of tools to sellers and wholesalers through its Amazon FBA program. This is a tool that Amazon provides, allowing all orders to be Fulfilled by Amazon once the products themselves are sent to Amazon warehouses. FBA does have a cost, but the amount of convenience it gives to a company will often make up for added expenses. All the companies need to do is ship the products to Amazon.

Selling in Stores

Selling in department stores and brick-and-mortar shops can be a tad more difficult because they tend to require more distribution partners. However, they are still viable and useful options when it comes to selling wholesale. Choosing the right distributor is a good first step to selling in brick-and-mortar stores.

Distributors will often reach out directly to try to purchase inventory at wholesale prices so that they can sell in stores. Selling to one of these wholesale purchasers is a fairly simple process, but it’s important to choose partners carefully. Also, you need to choose your minimum opening order: This is the lowest quantity that you’re willing to sell at wholesale prices to ensure you’re making a profit. Once you determine this, you can start testing with wholesalers.

How Settle Can Help You Scale

Selling wholesale is a big step for a growing business, and it has the potential of scaling your company up quickly. Settle offers the cash flow management systems that can accommodate quick growth so you can spend more time focusing on your expansion.

From centralized tracking to flexible bill pay management, Settle’s technology streamlines your finances. Settle also offers global access bill payment, which means as you expand into international markets (through wholesalers, possibly), your partners will get paid on time and without hidden fees. Moreover, we offer receivables factoring so retailers themselves can get cash flow moving quickly in their direction too.

Settle saves payers and vendors time as the volume of your business grows. Increase your efficiency as you scale with Settle.

Sources:

SharePlatform iconPlatform iconPlatform icon

Subscribe to our newsletter


OR

Recommended Articles

What Are Net Terms?
Learn4 min read

What Are Net Terms?

Making use of net terms can enable both buyers and vendors to increase their profitability and sales dramatically. This is what net terms are.

Settle Spotlight Series: Q&A with Vividly
Learn9 min read

Settle Spotlight Series: Q&A with Vividly

We sit down to chat with Alyshah Walji from Vividly, a trade promotion management (TPM) software built by and for the consumer packaged goods industry.

What is the Cash Conversion Cycle?
Learn6 min read

What is the Cash Conversion Cycle?

A company’s cash conversion cycle can speak volumes about its operational efficiency and financial stability. It can also determine whether people get paid on time.

Accounts Receivable Factoring 101
Learn4 min read

Accounts Receivable Factoring 101

Accounts receivable factoring can help companies can improve their financial stability and cash flow. We’ll explain what it is and how it's beneficial in our guide.

How to Create an Invoice
Learn6 min read

How to Create an Invoice

Creating invoices can be tedious, especially for new businesses processing everything manually. Learn how to create invoices effectively and efficiently with this detailed guide.

Settle Spotlight Series: Q&A with SourceMedium
Learn14 min read

Settle Spotlight Series: Q&A with SourceMedium

In this month’s Settle Spotlight Series, we chatted with Will Holtz from SourceMedium about how interconnected data can be a superpower for brands in hyperscale mode.

Why Supply Chain Visibility Matters and How to Achieve It
Learn5 min read

Why Supply Chain Visibility Matters and How to Achieve It

Improving supply chain visibility is becoming a priority for many companies, as it’s essential for streamlining operations, boosting efficiency, and maintaining strong customer satisfaction for consumer brands.

Do I Need an ERP to Manage My Supply Chain?
Learn4 min read

Do I Need an ERP to Manage My Supply Chain?

Effectively managing a supply chain is essential for any consumer brand working with a network of suppliers, distributors, and partners. If you're considering an ERP for your business, here are some key factors to evaluate to ensure it meets your supply chain needs.

The 2024 Settle Staff Picks Holiday Gift Guide
Learn2 min read

The 2024 Settle Staff Picks Holiday Gift Guide

Do you really need another gift guide this time of year? Our Settle team spends so much time obsessing over our customer brands, that the right answer is obviously yes. We have compiled the inaugural Settle Staff Picks Holiday Gift Guide, with the most fire small brands out there. So read on for ideas from stocking stuffers to travel accessories – for everyone on your list. And join us in shopping small this holiday. 

Settle 2023 Product Wrap
New Feature3 min read

Settle 2023 Product Wrap

A year in review of Settle's product releases that make running CPG brands easier.

Your purchasing process. Made simple.
New Feature2 min read

Your purchasing process. Made simple.

We brought simplicity to bill pay. Now we’re bringing it to the purchasing process, with end-to-end support that takes a load off your plate.

Invoice vs. Receipt: What's the Difference?
Learn6 min read

Invoice vs. Receipt: What's the Difference?

Invoices and receipts are similar in concept, but differ in the details. Here’s what differentiates invoices from receipts, and why it’s important to understand.

The CPG Guide to Managing Tariff Uncertainty
Learn2 min read

The CPG Guide to Managing Tariff Uncertainty

Proper planning is key to protecting profit in times of tariff uncertainty. With potential plans to impose a 60% tariff on Chinese goods and a 10% to 20% tariff on other imported goods, many CPG brands are taking 4 key steps now so they don’t get a shock to their COGs.

What is an A/P Aging Report?
Learn6 min read

What is an A/P Aging Report?

The Accounts Payable Aging Report is an essential tool for businesses with a large number of accounts payable to track. Here’s a general breakdown of A/P Aging Reports.

What Are the Consequences of Equity Dilution?
Learn5 min read

What Are the Consequences of Equity Dilution?

Equity dilution can be a very concerning process for shareholders who are unfamiliar with its consequences. This is how to avoid equity dilution and keep stocks healthy.

What is the Accounts Payable Process?
Learn4 min read

What is the Accounts Payable Process?

Accounts payable (AP) refers to all the payments that a business owes its suppliers and creditors. Neglecting your accounts payable process can lead to production and supply issues.

Black Friday CPG Prep Checklist
Learn6 min read

Black Friday CPG Prep Checklist

Black Friday sets the tone for your business’ holiday season. Start early on forecasting demand, devising marketing strategies, and preparing your site.

How to Evaluate Accounting Firms
Learn7 min read

How to Evaluate Accounting Firms

Figuring how to find the right accounting firm for your company can be difficult. Here’s how to choose the best accounting firm for any business.

A Guide To Inventory Management for CPG
Learn6 min read

A Guide To Inventory Management for CPG

Learning to navigate inventory management can be a tricky part of growing your brand. Check out our guide to inventory management to find out more about it.

Non-Dilutive Funding Guide for CPG Brands
Learn7 min read

Non-Dilutive Funding Guide for CPG Brands

A popular source of funding is financing from angel investors and VCs. Yet many companies fail to recognise non-dilutive funding — where no ownership is lost.

Navigating Distribution And Retail Margins for CPG Brands
Learn8 min read

Navigating Distribution And Retail Margins for CPG Brands

For emerging CPG brands, navigating challenges like supply chain disruptions and retail changes underscores the critical importance of understanding and managing retailer and distributor margins, as it directly impacts profitability and success in the industry.

How to Find a CPG Distribution Partner
Learn5 min read

How to Find a CPG Distribution Partner

Partnering with the right distributor is arguably one of the most essential tasks for a retail company. Find out what to look for in distribution partners and how to source them.

Accounts Payable vs. Accounts Receivable
Learn5 min read

Accounts Payable vs. Accounts Receivable

Understanding accounts payable and accounts receivable is an essential part of business workflow. So how do they differ? Learn more about them in this guide.

An Introduction to Cash Flow Forecasting
Learn6 min read

An Introduction to Cash Flow Forecasting

A company’s ability to make a cash flow forecast is essential in the world of modern business. Here is everything you need to know about cash flow forecasting.

What Is Amazon FBA and Is It Right For You?
Learn7 min read

What Is Amazon FBA and Is It Right For You?

Using Amazon FBA is a great way for companies to expand their scalability and fulfillment abilities. Here is how it works, and how businesses can benefit from it.

How Long Does a Wire Transfer Take
Learn7 min read

How Long Does a Wire Transfer Take

Wire transfers can be the quickest method of exchanging funds. Knowing how long it takes can help determine whether wire transfer is the best solution.

Guide: The ABCs of cashflow
Learn2 min read

Guide: The ABCs of cashflow

We put our heads together with the folks at IndieCPG to create a guide to the basics of cashflow for new (and maybe even not-so-new) founders.

Settle blog

Insights in your inbox

Join our newsletter and never miss an update on Settle's latest features and industry trends.