Expand your sales by selling wholesale with Shopify June 24, 2015 19:00
Occasionally, a business may reach a point where their sales plateau or they hit a wall in terms of gaining new customers. There may also be niche retail stores that your target customers are already familiar with and are used to shopping at such stores (for example, think of gift and merchandise shops at country clubs). In addition, earlier on in your Shopify store journey, you may want to focus on generating cashflow.
In such cases, selling wholesale with Shopify can be one way to increase your brand recognition, generate more cashflow and bump up your revenue.
Wholesale 101
Wholesale means when you sell your products in large quantities to other retailers (or wholesalers) and not your end customers. This is a business-to-business sales strategy where another store, whether it is online or has a storefront, carries your products and markets them to your target customers.
Wholesalers would buy your products in bulk at a lower price than the one at which end customers purchase them on your store. The wholesalers will then mark-up the price to build margins for themselves for the work they do to sell your products – this can be marketing, shelf space cost, etc. This means that you lower your gross margins when you sell wholesale. But, this may not be a bad thing as you can reduce your marketing efforts to end customers, and because you’re selling in bulk, you increase your revenue and cashflow from repeat orders.
Wholesale can expand your brand recognition by reaching more customers, and increase revenues by selling bulk orders.
If wholesale becomes a bigger part of your business than you had anticipated, this may affect your business plan. It’s not a bad idea to consult with business advisors or other store owners who’ve had experience selling wholesale to understand how it is different than selling to customers.
In the most basic way, you can enable wholesale selling by providing wholesalers with a discount code for your store.
There are three other ways to sell wholesale with Shopify:
- Separate store
- Memberships
- Wholesale apps
Separate store
You can set up a separate store using a sub-domain or a separate domain that you only send to wholesalers. On this store, you can sell products at a lower price and set minimum order quantities through apps like Order Limits (MinMaxify).
The advantage in selling on a separate store is that it is easy to set up without too much customization to your existing store. Depending on how your administrative process and logistics are set up, having a separate store may help with inventory management and specifically track wholesale orders.
But, it may also cause hassles as you’re keeping track of inventory through two separate systems, and you double your work each time you make a change to an existing product or add a new one.
Memberships
Wholesalers can have customer accounts on your store through which you can track how much they purchase and their repeat purchases. (If you’re not sure how customer accounts work, watch Shopify’s quick tutorial on customer accounts.)
Instead of manually giving discounts to wholesalers based on their purchases, you can use apps like Supple Membership that automatically manages members based on a number of factors, including their lifetime value of purchases, number of purchases, type of purchases and more.
The app also allows you to automatically set discounts in the shopping cart based on the tier of membership a customer holds. For bulk purchasers, you can set up tiers based on order quantities that will give a different discount based on their tier. For example, you can apply a 10% discount for customers that spend more than $500 during a purchase, 15% for orders over $750, and so forth.
Take a look at the Supple Membership demo store to see how the app works.
Wholesale apps
Shopify has a number of apps in the App Store that allow you to sell your products at different prices to wholesalers. Apps like Wholesaler and Supple Wholesale allow you to mark certain customers as wholesale who see lower prices for products you want to sell wholesale.
Both these apps allow you to set up multiple levels/tiers of pricing when wholesalers are logged into their account. Take a look at the demo store for Supple Wholesale to see the app in action.
Other apps, like Locksmith, which allow you to make certain products private, can also be used to give access to certain products and pricing to select customers.
The advantage of integrating these apps to support your wholesale customers is that all your inventory is tracked within the same store and helps keeping track of your orders.
Selling wholesale
There are a number of ways for you to sell your Shopify products to wholesalers, but whether you should even sell wholesale or not would largely depend on your business objectives, costs, and sales trends. Remember, the upside to selling wholesale is that the wholesalers become additional vendors from where potential customers can buy your products, thereby increasing your sales and brand awareness.
But on the downside, selling wholesale typically reduces your gross margins as your products are sold to wholesalers at a lower price than the one on your Shopify store. If wholesale becomes a bigger part of your sales than you had anticipated, this may mean revisiting your business plan to factor for these lower margins. Depending on the product, you may also lose control over the experience a customer has with your product if on your Shopify store you show tutorials, give incentives, provide support, and manage the overall experience to enhance customer loyalty.
Do you sell wholesale? Tell us your experience in the comments below.
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