Before explaining how to start a home-based wholesale/manufacturer distribution business, it is important to explain what a distributor is. Basically, a distributor is a middle person that serves to move product from the manufacturer to the market. While some distributors are retail and sell directly to end users, others are merchant-oriented and sell and move products from the manufacturer to wholesalers, that in turn sell to retailers.
Understanding what is a wholesale business
The practice of wholesale distribution is a true buying and selling game and can involve risk. It is a game that requires good negotiation skills, a nose for sniffing out the next “hot” item in the particular category you are known for, and good salesmanship to find the right buyers. The basic premise is to buy the product at a low price, then make a profit by tacking on a low enough dollar amount that it still makes the product financially attractive to your end customers.
Getting your business started
In the case of many products, as a distributor you do not need to take physical possession of the product – and therefore could run this type of business out of your home and not require a physical office or warehouse facility. Those who work in the distribution game will tell you that it is not always the easiest business to succeed in. You need to have a varied skill set that includes salesmanship, cold calling abilities, an ear to the ground on trends, be willing to take risks, and research skills to find new product sources as well as new customers for the products you find.
The distributors role
One of the biggest risks in being a distributor is when a manufacturer implements consolidation, basically forcing you to take and sell some of their other products in order to earn the rights to distribute the product that you want. To combat consolidation, some smaller independent distributors choose to serve the specialty market instead of trying to compete with larger chains. They pick up the the small pieces that the larger distributors don’t take, and then serve the smaller customers that the larger companies do not see as being as profitable to them.
Sometimes starting a distribution company requires a greet deal of capital, especially if you are buying an existing distributor or trying to start a new distributorship from scratch. A third and more risky option is to buy into a new opportunity that does not have a track record and may not succeed. You, as a business person, do not want to be left holding the bag if the company providing the products, or the products themselves, fail.
Just like any new business or start-up, it can take a few years for a distribution business to become profitable. That is not say that it will always take that long for your distributor business from home to make money. There are plenty of cases where a company was in the right place at the right time and took off within months of starting. It is all about finding the right product that is in demand at the right time.
Finding a Product
There are a variety of products on the market today, all of which serving a multitude of needs and functions. The goal of this process is to find a product that will help to serve a need completely and instantly. When you are looking into finding a product, think of these qualities and characteristics: Uniqueness, remarkability, the reliability of the supplier, the credibility of the supplier, are you able to take advantage of being the first in the market for it and an authentic origin of the product.
If you are looking for a dedicated listing for B2B marketplaces, Emerge have created the best B2B marketplaces in China. This will help with finding a place to source your products, as China is known as the “world’s factory” this will help with find a place or product to start your business.
Knowing the customers
Now that you have found the product you are going to be selling, you now will be focusing on selling to your customers. While it might seem like an obvious tip to know your customers, too many businesses often fail to put in the effort to know their customers. It is best to build up your knowledge of your current customers, where they heard about your product, what their needs are, etc. Knowing this information will help you create a clearer understanding of your business, as well as how to better serve your customers in the future.
As companies grow, their customer size also grows and there is the potential to lose that personal touch. Once a customer feels like they are one in a thousand and treated that way, they will start looking elsewhere to get their needs met. So it is important to build long-term relationships with your customers, this will help maintain your business and customer base. There are many more factors you can take into consideration while thinking about your customer service and increasing customer satisfaction in your brand.
To help make sure you get the right customers for your business, you will need to learn how to market your products to any potential customers or client leads. Don’t expect to get any new clients to come to you, but you will need to learn ways to get new customers to come to you, how to seek them out, identify potential leads, and help to market your company and products.
If you plan on selling a niche product, one way to help boost sales is to identify where your niche customers hang around online and to join their groups. Take advantage of this by identifying where your niche gets together such as Facebook groups or blog communities. Once identified, join these groups so you can see what your target customers are discussing.
Marketing is indispensable for any business to succeed, drop shipping or not. With that in mind, the explosion of different marketing channels and strategies over the past years has made it challenging for a drop shipping business to keep up and soar fully. Therefore it is important to focus on what works best for your business.
Again, like other businesses that you want to start, you do not want to use your home address or a Post Office Box as your business address, basically because it looks extremely unprofessional. A virtual office could be a great solution for you, but you might be better served with a shared office space that gives you not just a professional business address at a prestigious location, but also access to meeting rooms and office machines that you do not have to buy. This is especially true since a great deal of paperwork is still done by fax and direct mail.