Should online retailers sell wholesale too?
To make a decision about whether you should sell your private branded products on a wholesale level or continue to use your own online selling system you need to do the math. Can you expect to make more profit continuing to sell retail, or rely on the potential additional selling volume to grow your business and make more profit at the bottom line?
Factors to consider:
- Selling your own unique branded product at retail you are making, or at least should be making a larger profit margin. When you start selling wholesale your profit margins will probably drop.
- Will selling wholesale really increase your overall volume, or will it actually hurt by diluting your business by increasing competition among your customers? I don’t want to be judgemental but many e-Commerce sellers only know how to compete based on lowing prices. This leads to fewer profits at retail, and more pressure on your company by customers to lower prices to maintain demand.
- Increase in sales volume may make it easier to negotiate lower prices from your suppliers. Better and more efficient shipping processes may lower your internal costs of warehousing and handling, and selling more product to fewer customers can lead to cost savings in order processing, accounting, and customer service functions.
- How would you feel about totaling abandoning your retail business in favor of the wholesale business. It is often a conflict of interest to sell both wholesale and retail at the same time, as you will be in direct competition to your customers. You may get around this point by restructuring your business to open a new retail sales venture.
So the bottom line is this. Will you eventually make more or less money by selling wholesale?