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B2B wholesale is a profitable undertaking attracting a lot of interest because of its large volume of transactions and economic dynamics. The industry's growth is attributed to modern technology, which has increased the market's penetration.
In the US alone, the B2B wholesale industry produced an annual revenue of $8.3 trillion in 2018. This figure is also projected to grow by 1.9% from 2018 to 2023. B2B product companies are growing at a rate of 8.6%. In comparison, the B2B service companies are leading with 15.6%.
B2B wholesale is an aggressive marketplace that businesses can't afford to ignore anymore. For that reason, let's explore what a B2B wholesale business is, the types of B2B wholesaling, the benefits, features of a B2B wholesale website, challenges facing B2B wholesale, and the best E-commerce platforms for B2B wholesale.
B2B wholesalers
sell and market their products and services in bulk to other organizations. Some companies buy these products for use, while others purchase them for reselling.
B2B wholesale transactions are usually huge because of the large order size. As such, these business transactions are made possible through long-term contracts.
The business's model players are the manufacturers/wholesalers and wholesalers/retailers. Additionally, thanks to technology, these wholesalers can now link with manufacturers and retailers globally without intermediaries.
B2B wholesaling also includes wholesalers like 'big-box retailers, who many think are also retailers. However, big-box retailers are wholesale companies specializing in large volumes of products through ongoing relationships. Big box retailers sell their products to enterprise chains like Walmart, Target, and other retailers.
There are three categories of B2B wholesale businesses.
Merchant wholesalers
buy, sort, and handle somewhat large quantities of products. They later repackage these products and resell them to retailers in smaller amounts.
Agents and brokers are middlemen who participate in the selling and buying negotiations on behalf of their clients.
These wholesalers are primarily used to distribute the manufacturer's product wholesale.
B2B wholesaling attracts many leading traders because of its many benefits. Some of the countless benefits these businesses reap include:
Every B2B wholesaling company aims to sell its products directly to retailers without passing through an intermediary. So, if you are a B2B wholesaler, you don't need to market your product. Instead, you'll rely on your product retailers to resell them and create brand awareness.
B2B wholesalers have additional control over the supply and demand of the products between the retailers and the manufacturer. The retailers lack adequate capital for bulk buying. Therefore, they depend on the wholesaler to buy from the manufacturer and resell to them.
Some manufacturer can't double up as a wholesaler because they need to sell these products in big volumes to have enough working capital. Wholesalers solve these problems by acting as the bridge between the manufacturer and the retailers.
The beauty of wholesaling is you don't need to worry about profit. You are eligible for a fixed profit margin of 3-10% as a B2B wholesaler. The profit comes from wholesalers reselling a fixed amount of goods to retailers.
The Average Order Value (AOV) is the total value a customer spends on placing an order. Wholesalers deal in large volumes of products through long-term deal structures.
The wholesalers will, therefore, get higher order volumes and AOVs over time because of the long-term contract. The B2B wholesaler's deal structures and order volumes also increase customer lifetime value.
A B2B buyer makes an average of 12 online searches before settling on any business. Sadly, most B2B websites don't make it among the top sites in the search engines because of inadequate SEO marketing. An ideal B2B wholesale website should have the following features:
Your B2B wholesale website should have account management, order duplicating, inventory availability, multiple shipping/payment capabilities, bulk ordering, pricing, etc.
Always check your platform's useability, although B2B features are usually advanced to serve its complex transactions. Your website's operations should support these complexities and still be easy for retail customers and admins to use.
Integrating third-party modules is essential in managing a customer's touchpoints. The Add-on functions like the post-sales experience, sale point, and many others can be easily transferred to your website.
Most buyers do their internet searches through mobile devices, so ensure your platform is compatible with and responsive to mobile devices
.
B2B customers want digital means when purchasing. Therefore, to stand out, your e-commerce platform should be able to increase your brand's online visibility. Use SEO strategies like link building and blogging to increase organic traffic to your website.
What are the Challenges Facing B2B Wholesale?
B2B wholesalers, particularly those trying to balance the pricing margin, find the international competition hard. The global competition puts downward pressure on these businesses, damaging their low margins.
The internet is making wholesaling difficult with its competitive prices. It's up to the wholesaler to see technology's benefits and take advantage where they can.
The B2B wholesale industries experience a shortage in the supply of items like electronics, office supplies, and Do-It-Yourself supplies.
The shortage has been caused by the influx of national retailers' growth. It's time the B2B wholesalers focus on market-specific needs and serving their client base.
The B2B wholesalers are filling in the existing gaps in revenues and sales using digital tools. Let's examine some of the best e-commerce platforms that these businesses use.
Shopify plus platform
covers over a million online shops globally. The E-commerce platform is the perfect solution designed for scalability and reliability. The platform is also ideal for e-commerce businesses seeking technical solutions. Besides, it offers customized pricing plans that are specific to your business needs.
The Adobe-created platform
offers many personalized solutions to businesses that want to scale further. The platform helps B2B wholesale businesses create unique web traffic and uptime with complete website control.
The software has an intuitive interface that makes it user-friendly to update and manage high-volume transactions. The software's Essential plan starts at 29.95USD, while the Enterprise plan starts at 1500 USD together with the transaction costs.
This is a free e-commerce software
, though the additional tools within the application are payable. The open-source B2B e-Commerce platform is an efficient option for businesses beginning their eCommerce journey. Its intuitive interface with responsive features and plug-ins sets it apart as one of the best B2B e-commerce platforms.
Big commerce
is a platform that serves all kinds of businesses regardless of the domain or products they sell. The platform offers personalization without developer skills and extensive reporting choices at affordable pricing. Besides, it delivers in all aspects, and its overall approach to serving B2B wholesalers is worth it.
Growmax
has one of the best multiple features for B2B wholesale companies. The easy-to-use platform's features include customer-specific pricing management, SEO management, product management, built-in quote management, customer support system, and order management.
The basic plan starts at $29, with the highest plan going up to $289 depending on the features. They also customize plans upon request.
Starting a wholesale business without the right POS system has a lot of challenges, including poor inventory management
The Erply POS system
notifies your manufacturer to produce a new batch of goods once the reorder level is reached. This ensures you don’t run out of stock, ensuring a great customer experience.
Erply also stores all the information regarding your customers and manufacturers, allowing you to make better business decisions.
Sign up for a free trial
today.
Although penetrating the wholesale business may seem challenging initially, it gets better with time. The most important thing is to have an insight into the business.
Doing research by reading articles like this one, or visiting other B2B wholesale businesses will give you a head start. Be sure to understand the various types of wholesalers, benefits of the business, and the e-commerce platforms that will accelerate your growth.