Table of Contents
Once a wholesaler decides that he want to deal in a particular line of merchandise, he should be ready to find a market the product to and cut out his niche. Logistical issues such as shipping and storage should be put into consideration by studying the market. He should then have a plan on how to supply and how the merchandise will be supplied by the manufacturer. To reach these objectives, he must establish a proper channel to enable him to get a constant supply of merchandise, and a Lease needed room for storage and other functions needed for effective order fulfillment.
A proactive strategic business plan is essential for the expansion of business (Chamber of Commerce of The United States of America 1947). There are very many perceived barriers to the expansion of wholesale business. These barriers are inclusive of inability to control business operations over multiple physical sites, outdated facilities and information systems and inability to handle the prospects of new customers all in respect to selling his products.
A challenge for a wholesaler would be the ability to sell products in greater volumes. Growth strategies in the volume are mainly pegged on selling more products to the already existing customers and establishment of a new customer base, and thereby adding more customers (Field 2001). This leads to the question of how to retain the regular customer and how to get new market for the products.
To do this, a wholesaler is obliged to establish services that aim at improving the customer’s operations to indicate measurable profits to the customer’s business. A wholesaler therefore should build a loyal customer base, based on the knowledge of the value of services he is ready to offer to the customer through for instance, reduced market time for the customer by delivering ordered goods for free to the customer.
At the same time, a wholesaler should have mastery in the financial dynamics of such service that he offers free of charge and also the utilization of professionals as it increase the quality and measure of profits as an additional to the traditional one way view of maximizing profits through the product gross margin (Field 2001).
A wholesaler direly needs to have staff such as an executive sales manager who for instance, is I a position to determine what type of customers to add to the portfolio, and not any customer, who would bring a low margin as compared to the existing customers (Wright Sykes 2004). Communication is crucial as customers rely on a supplier who responds fast, with competitive prices, and one who can highlight other substitute products. This will entail an open channel of communication that could be efficiently handled by a trained secretary.
In wholesaling, it prudent to have a standard form of binding, those a distributor does business with, be it the suppliers, customers or the leases he takes up. This ensures that any deal they get into is legal and enforceable and therefore there would be redress in instances of breach of agreements, and this will enable him not to lose his capital (Wright Sykes 2004). Legal issues are wide in range to include the filing and payment of taxes and other duties. This involves a heap of paperwork, as the wholesaling business does.
To cope with massive paperwork, a distributor needs to use automated accounting and record keeping. This is neat, time saving as there is no need to reconcile records as there is constant updating of the records, and also retrieval is fast an efficient. Some of this software is capable of calculating and invoicing for the wholesaler.
Wholesale distribution aims its focus on new customers either within their geographical niche, beyond their physical location or both. Addition of new customer base would be challenging when it involves the existing current market, as some of these customers may have another preferred supplier (United States 1989). To sail through this, the level of services provided and performance such as taking new orders and fulfilling the same should be superior as compared to other distributors, to his competitors.
To charge into a geographical market that is beyond the physical location can be through the opening of branches. This however, requires a huge capital inject, which may not be available. The alternative for a wholesaler who wants to expand his business at low cost would be to consider internet merchandising of goods, which sets the wholesaler in a global market.
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For customers in a different physical location a wholesaler can control operations by the provision of a vendor managed inventory, where he uses the actual merchandise usage by a customer other than waiting for the customer to make orders. This is possible where the wholesaler receives data electronically on the customer’s sale and inventory of the stock .Vendor managed inventory makes the wholesaler responsible for the generation of customer orders in relation to the order size and shipment (Wright Sykes 2004).
To make the wholesaler business operational, the wholesaler will choose a single business venture for starters and increase the sales of that product. This is to reduce risk and opens up market. To expand, one can offer complementary merchandise for instance, I sale of cheese, sale of jam is viable to complementing it with meat products. This enables customers to have a one stop shop for a line of merchandise and therefore appeals to them as it saves them time.
Another way to implement these ideas is to increase sales from the current customers. This is going to be through the use of discounts for voluminous purchases, promotions and loyalty cards that entitle the customers to free products after buying a set number or type of merchandise.
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Packaging of the goods and their presentation is another very essential investment in any business and especially food. This involves the state of the physical goods this is the art of merchandising, which involves activities that a wholesaler does in relation to packaging, display and the mode of selling products. Merchandising attracts customers which they in turn buy.
Investment in technology that is best suited for the size of your business is very important to the ease of transactions and efficacy in matters to do with keeping customer records, taking and evaluating orders, record of inventory stock, logistics such as transportation, accounts.
There is also need to invest in details of warehousing. The warehouse may be leased which involves the correct channels of acquisition to the exclusion of other peoples’ interests, so to say you own the key and not the landlord (Wright Sykes 2004). Regulations of warehousing should be followed which is inclusive of health regulations. For perishables, there is need for acquisition of a cooling or freezing machine that is stand by to avoid the spoilage of cargo
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Human resource in the greatest of investment to put these factors into play: a single handed distributor cannot handle business when a certain level of supplies and orders are made. There is need for employing staff such as accountants, sales persons, communication managers and information technology personnel. As much as it may seem expensive, efficacy will be observed, and an increase in labor increasing sales.
Benefits and Opportunities
The use of wholesale as a medium of expanding Kalin’s business is full of opportunities to him and also to the market (Eto et al 2004). I the position of a wholesaler, goods will move at a faster rate as compared to where he sold small packages, as a single deal could entail even selling almost all his stock. The internet gives him the opportunity to connect with suppliers and therefore, he can have a constant supply at competitive prices.
The customers also benefit from ease in picking items and orders vie the internet and due to their loyalty the can get free items. They also get the advantage of a single stop shop for merchandise that is complementary to each other.
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Wholesaling is a better option for bulk selling of merchandise. There are cheap and cost effective means of expanding the business and maximizing profits. It encompasses a wide range of concerns which range from the supply of the merchandise by the distributor, financial considerations, and acquisition of a warehouse, workforce, packaging, advertisement and eventually sale of merchandise in a studied market. Once these factors are effectively consolidated, and effectively used they are sure to expand the business and increase the gross margins.
A wholesaler should test the waters before dealing for supply, to ensure that he has a ready market, that he can order supplies to the extent that his capital can afford and to the extent that he can store the goods hygienically and without destruction. Low cost funding of business is the key to profit making
To expand his business, Kalin first of all, needs to ensure that he has a steady supply of merchandise and a storage area that has been acquired through a proper agreement. All business dealings are similarly recommended that they are in written contracts for the purpose of documentation. All government regulations should be met which is inclusive of licenses, inspections and other specialized policies.
Using a vehicle as a shop, a storage room that is leased under a gentleman’s agreement and his house for receipt of orders and order fulfillment for a wholesaler is tedious and limits expansion, cost effectiveness and capacity of workforce. It is recommended that Kalin acquires a warehouse with cooling and storage facilities. The merchandise is also to be properly packaged, advertised and other means of enhancing sales such as promotions.
It is also recommended that Kalin sustains his current customers through steadfast valuable services, and also aim at increasing their product orders. To expand to new market base he should build capacity for his new customers and it is advised that he considers internet sale of merchandise and therefore installation and maintenance of an effective website, to enhance international reach.
He also has to consider a line of merchandise that complements his selling of cheese. Wafers, roasted red peppers and marmalade are viable but the meat products have a big variation, and therefore would be best dropped.
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To accomplish the expansion, Kalin should try and minimize the expenses at all costs. Where for instance he needs to full time hire staff, he can hire on the basis of commission for instance I the case of the sales person and some posts can be filled by interns. Efficient utilization of the internet is cost effective especially as it runs day and night and it is effective in advertisement. He can also maximize potentials cheaply through his participation in trade organizations as it enables him to be updated on some of industrial developments and they also a source of contacts with key players in the market sector be it investors or customers.