How to Buy Wholesale Products from a Trade Only Supplier in the UK
As a wholesale supplier to the retail trade, we're often asked how people can buy from us. Here's a quick guide:
Service, Price and Supplier Selection
A lot of retailers focus on price, which is definitely a big factor on many items; such as washing up liquid. However on decorative gift items, price can be less transparent. What most trade customer focus on is quality of the service being offered by their supplier, do they carry good stocks, how quick is delivery, how easy are they to order from. How supportive are their suppliers, through the good times and the bad. As the saying goes, people buy from people.
When you first think about buying from a supplier, call them and ask some of these questions. If you meet them at a tradeshow, ask these questions on their stand and watch their face to see if they can answer you honestly. In retail the customer and supplier relationship is very important as they both work closely together. If you supplier thinks they just need to sit and wait for you to send them an order, they're probably not the best supplier for you.
How Often Should I Order?
All suppliers would like customers to order in huge quantities, preferably of a single item. The olden days have long past with the invention of terms such as "just in time inventories". Retail is slowly adapting to this and most retailers recognise both storage and shelf space is a premium and they need to be putting the best selling products on their shelves more often. In retail we call this stock turn - if you take a company like Apple, they can turn their stock 54 times in one year. If you have £10,000 in stock at cost and you use the industry average of 2.4x markup, you would sell your inventory for £24,000 and if you did that like Apple, you would generate almost £1.3m or £756K gross profit. If you turn your stock twice a year, you would generate £48,000 in turnover or £24,000 in gross profit. As you can see, stock turn is a very important factor in running a business. When selection your supplier, you need to select a supplier which allows you to buy small quantities, frequently. Thereby keeping your shelves replenished often. A shelf filled with stock that no one wants to buy isn't a good thing - sell it for as little as you can accept (or use it as a loss leader!)
Markup and Pricing
The saying in retail is "Charge as much as your dare". The days of being able to put something in a shelf and people will pay what you want are slowly getting behind us. It's a little too easy to do a google search to compare prices very quickly. This means you have to be a little more price aware. As we explained above, most retailers work on 2.5x their cost price to get to their retail price. Some larger retailer may require more to cover their overhead and some discounters may charge less.
Another saying in retail is, the profit is made in the buying. Buying is such an important subject, you need to really think about what you want from your product selection. Do you want to buy the same lines, as the shop next door or do you want to have your own range. People walking down the high street don't want to see the same items in the same shops, so don't offer it. Find something new, invest the quiet times in finding new suppliers. We all know it's easier to buy all your ranges from one or two suppliers, but does that really offer something different for your customers to want to come into your shop? Find smaller suppliers, who take care of you, who will help you find something different. Smaller suppliers may offer better discounts for buying in bulk. Try and buy new lines, make your shop appealing for customers, keep it fresh. Become a destination!
These are just some of our thoughts about how to find a supplier, work with them and run your shop. Hopefully this is of interest, we love to talk so drop us a line to discuss if you have any thoughts.