Intelligent ways to overcome overhead expenditures in wholesale business

Wholesale business like any other business has overhead expenditures which are often not unchecked and they consume the major part of spending. There are two types of expenditures; direct expenses and indirect expenses. Direct expenditures are the ones done on buying, selling, giving pays to employees etc. indirect expenditures are rent, utilities, taxes, licensing fees, insurance of employees, travel, accounting services, extra services given to employees and employees’ allowances etc.

In order to generate healthy profits it is necessary to check all the indirect or over head expenditures. There are also some other over head expenditures which are not indirect expenses but if remained unchecked can cause the profits to drain out e.g. lack of time management, transportation problems, surplus or shortage of employees.

To control overhead expenditures the wholesale supplier has to adopt some intelligent techniques. There is no rocket science involved in this process, the wholesaler himself has to take initiative and devise a plan on how to stop or decrease overhead expenditures. In the plan he has to list all those things which are consuming the income (no matter how small or big). After listing, concentrate on the possible ways to cut the expenses to minimum level. Time management is one of the major problems due to which expenses increase. To solve time management problem the should intelligently redefine all the duties of his employees according to his new plan. In his newly defined plan he should focus on the consumption of time. This plays a vital role in saving expenses because if the whole process which includes buying wholesale products, storing in warehouse and listing in inventory, is completed in lesser time then obviously the pending orders will also be performed earlier.

Transportation is also one of the main hole from which the income is drained out. Define fixed and shortest possible transportation routes; also try to define them on off traffic hours. It will greatly impact on the overhead expenses as the fuel will be consumed far lesser then before with lesser vehicle maintenance. The managers and other senior authorities in a business sometimes misinterpret the required number of employees to run a wholesale business which in return causes employee surplus or shortage of employees.

Surplus employees are like parasites who are just consuming the income of wholesalers whereas shortage of employees makes it difficult to manage different tasks. So wholesalers should evaluate the duties of all employees and hire the employees accordingly. Also try to minimize the services and allowances provided to employees. If you can easily relocate to a place with lower rent then do it as soon as possible. All these things together will reduce the overhead expenses for wholesalers and they can utilize the amount in growing their business more and more.

What is in your mind? share in the comment section below.

Think out of the box - Offline marketing for your online wholesale business

Marketing is the lifeline of all businesses, be it online or offline, businesses cannot survive without marketing. Online marketing, though comparatively new, has made its mark and one can find many people swearing on the importance of online marketing and they are absolutely right. However, this obsession with the cyber world can make the online wholesale business owners fail to realize the benefits of offline marketing. If truth be told, offline marketing can be equally effective for wholesale businesses. In fact the gaps are fast closing between online and offline marketing methods. Ideally a wholesale business must approach both online and offline marketing with the same vigor. The point is that you’ve got to reach your customers in one way or another and it doesn’t really matter if they are online or offline.
To start with, you should be promoting your URL (domain name) on all of your packaging, letterheads, ads, and anywhere else when applicable. If you are running a website that targets local customers for your wholesale supplies then you should go for classified ads that appear in the local newspaper, with your URL given in the end. It will enable the customers to come directly to your website when they need your services (instead of searching at Google and going to the top ranked websites).
You must get your wholesale business submitted into locally published yellow pages and wholesale business directories. Apart from that, you need to be active on local wholesale business scene. Take part in seminars, wholesale trade shows and other business events and get into conversations with the people coming from similar field. Hand out your business cards (with your domain) and request them to visit your website and give feedback.
Another very effective method is to distribute flyers about your online wholesale business. You can also go for the posters and stickers or even banners to promote your online wholesale business. If you are an expert providing some sort of coaching or consultancy services, you can try appearing on a radio or local channel program as an expert. Mentioning your website at the end of the show will make your website known for general public and prospective customers. Doing so will also add credibility to your business name.

You can offer a career coaching service, you can try and appear on some program for fresh graduates and offer basic tips for the starters in the wholesale business. If the tips or information shared by you were good enough, you will be having lots of customers visiting your website in the next few days, depending on how good is your website when it comes to converting visitors into customers (you need to make sure that your website has been mentioned by the anchor along with your introduction or during the show). To become a successful wholesale supplier one needs to create a blend of online and offline marketing strategies.

Why is it important for your wholesale business to accept credit card payments?

There is a little ambiguity when we search for the person who actually invented credit cards, or came up with the idea (apparently it was John Biggins from New York who is said to be the mind behind first Bank credit card). Businesses are dealing on credit for a long time, but E-Commerce industry should be thankful to the person who first came up with the idea of credit cards. It is only because of the convenience, provided by credit cards, in making online payments, that eCommerce industry and global wholesale industry has flourished with an amazing speed. Credit cards are prevalent in all developed countries, and some people carry up to a dozen credit cards in their wallets. A credit card allows the bearer to make immediate payments even if they don’t have the amount in their bank account.
Coming to the point of why is it important for your wholesale business to accept credit card payments, online shopping is a little different than offline shopping. A big majority of the purchasing decisions are made at spur of the moment, it’s very rare that an online shopper will leave and come back again to buy the product. Therefore, you need to have a system in place, to facilitate the procedure of making a purchase, for these buyers.
Similarly, distributors need to entertain international customers. Otherwise you will be missing a huge segment of the market. There’s hardly any website that targets only the local customers (except when the website is about a local business like car rent or attorney’s service). Even though, there are various ways for receiving international payments but no method comes close to credit card payment, which is fast, convenient and reliable for both buyers and sellers of wholesale supplies.
There are different means for accepting credit card payments. First one is to get a merchant account but it is an expensive option. Another option (which is recommended for small wholesale businesses) is to accept payments through a third party merchant account (e.g. PayPal). If you have any idea about eCommerce or online business, you’ll be aware that what kind of a difference “PayPal” can make to online wholesale business sales. wholesale businesses who do not accept payments through “PayPal” find it hard to compete with the businesses that do. Online customers often insist on making payments via PayPal. In addition to that, accepting credit card payments will add credibility to your wholesale business. Therefore, start accepting credit card payments if you want to grow your business.

What is in your mind, share in the comment section below.

Why manufacturers must learn to use ERP software

The long term focus of any business is to expand itself, to gain and retain customers but currently, the competition is quite intense and customers are more demanding. Due to this everyone is facing tough situation and wholesale manufacturing companies are not exception to this. Wholesale manufacturers need to be unique and put additional efforts for designing and developing wholesale products to cater customers’ demands and to beat the competition. To stand out of all, one needs to have a proper system or software that can integrate all the activities within the system. ERP (Enterprise Resource Planning) is one such approach to improve and update the complete system. Few other benefits of ERP software are given below:

Managing the Diverse Environment
Obtaining raw materials, managing them and converting into final products are common activities of manufacturing company. Most of the operations are versatile in nature and it is quite difficult to manage them altogether. ERP manages all activities such as material sourcing, purchasing management, product planning, product development and inventory handling. It connects all activities so it becomes easy for a manufacturer to monitor and integrate the processes. Once the work flow becomes efficient and unified, the productivity improves.
Lowering the Cost
The biggest advantage of using ERP software for manufacturers is to bring down the overall manufacturing cost. There is less paper work, less data inputs, resultantly less repeated tasks and the input data is available to all departments. Due to open data availability and fast communication, decision making is improved, accurate and based on real information. It increases efficiency and productivity on the whole that lowers down the cost.
Inventory Management
ERP software automates and standardizes the manufacturing processes to improve the outlook. It provides an easy access to manufacturers to the transparent information about inventory and stocks availability and automates the process of buying and managing materials. It becomes possible for the manufacturer to predict the market demand, how much supplies to be purchased and how final products be distributed. It reduces the inventory cycle time and increases inventory turnover as well.
Better Response Time
ERP software is developed for the manufacturers specifically to help them in taking better decisions in terms of time. It integrates the complete data of a company, makes the data available to the manufacturer and supports him to take the right decision based on true information. Data credibility and in-time data availability allows him to take quick actions that can increase his response time.
Providing Proficiency
Every wholesale manufacturer wants to be big but for this he must understand his customers’ demand and provide them top quality products by adding value to it. ERP software addresses this situation by guiding the manufacturer to follow the practices that are best. It can improve the manufacturer’s relationship with the customers by understanding their interests, giving them good quality products and quick product delivery.

If you want add anything related to this you can share it in the comments section.

What will happen if the wholesalers are eradicated from the supply chain?

Wholesalers are the first link in the supply chain that performs a number of useful functions besides facilitating manufacturers and retailers. In spite of their useful services wholesalers are loosing some ground in the current era. Dropshipping is a new concept that has eliminated the need of wholesalers from the supply chain. A drop shipper appoints his own distribution staff or opens his own retailing outlets to sell directly to the retailers. This seems to be very beneficial for the large wholesale manufacturers. According to me, a wholesaler cannot be eliminated completely from the supply chain due to the valuable services he provides to the manufacturers as well as retailers.

The question here arises what will happen if wholesaler is eliminated completely from the supply chain? The answer lies in the significance of its services for the supply chain members. First of all, if wholesaler is eliminated from the supply chain, there should be someone to perform his functions. Dropshippers are the ones who manage to perform the functions of wholesalers themselves. But is every producer of wholesale products capable of doing so? Obviously not, as majority of producers are small ones who manufacture a small fraction of the total wholesale supplies. They do not have enough resources to capture clients directly. Most of them have no large resources to perform marketing functions themselves i.e. packing, shipping, grading etc. So, without wholesalers in the supply chain, the business of the small manufacturers gets greatly affected as they are not able to perform the functions of wholesalers alone with small scale of operation and shortage of resources.

Secondly, it is not all about small manufacturers only it is about many other small retail businesses as well which are served by the wholesalers. If manufacturers don’t perform these functions, their burden falls on to the shoulders of retailers. Here again availability of resources becomes a major problem for the small retail businesses in performing the tasks of wholesalers.

Thirdly, if wholesalers are eradicated from the supply chain there will be no one to create time utility and to keep the wholesale price steady? Wholesalers buy when the products are widely available and prices are low and sell when the prices are high. In this way, they create time utility and help the retailers to earn high profit margins on resale.

Fourthly, the wholesalers relieve the retailers to hold large inventories and bear their burden of cost. Besides that, they bear all the storage and distribution risk and help the retailers in steady flow of goods from reliable resources. On the other hand, wholesalers give bulk orders to the manufacturers and access the demand of the wholesale products and help the entire wholesale industry to operate efficiently. If they are eliminated from the supply chain, either the manufacturer or the retailer will perform these functions. It becomes very difficult for them to spend extra time, effort and huge cost on these functions. Even if they do so, they would not be able to manage these functions as efficiently as wholesalers do because they have many other things to manage besides performing these functions.

Therefore due to efficient handling of wholesale orders and effective distribution of wholesale products, the wholesalers cannot be eliminated from the supply chain. They are bound to exist since decades and their valuable services can never let them get eliminated from the supply chain ever.

Tell us if you have something to share in the comments section.

What can be the competitive edge in a wholesale business?

Wholesalers have a rather limited set of customers, and when they lose one of these customers, it is quite hard to regain, because wholesale buyers do not change their suppliers as often as the individual customers. Therefore, as a wholesale business, you have got to have some competitive advantage right from the onset, to be able to win as many customers as you can. Gaining a competitive advantage is not difficult if you know your customers and their requirements.

Price:
When you are dealing with commercial users, there's no competitive edge more compelling than the low wholesale prices. If you are starting as a wholesaler in an already saturated market, you have got to start with offering somewhat lower prices than your counterparts. You can do this by going for lower profit margins, or even better, by finding a cheaper source or supplier for your targeted products. Retailers will need no second invitation when they see a supplier offering low prices and high profit margins.

Lead-time:
Having a better lead-time than your competitors can be a huge competitive advantage. There is always some delay between the time when you receive an order and the time when you deliver the products to your customers. Distributors can not eliminate the lead-time, but they can surely reduce it. Besides, you've got to provide your buyers with an accurate estimation of the lead-time so that they can adjust their replenishment process accordingly. Inaccurate information of lead-time will result in some inventory related problem for your customers and they will just move on to another supplier.

Payment Terms:
If you are not able to offer lower prices, you can still have an edge over your competitors by providing better payment terms. For example, wholesalers can offer perks on big orders or discounts when the customers make the payments in a given time period.

Value added Services:
There's so much you can provide to your customers, other than the actual products. For example, you can provide them with training or information about the products that will help them provide better customer service, or you can keep them updated about the possibility of up coming trends or demands.

Packaging:
Branded products come with their own packaging, but when you are providing non-branded products, you can always come up with better packaging. Talking of the retailers, you can also provide support and ideas to the retailers to help them improve their display.

Importance of accurate demand forecasts for the wholesale business

Wholesalers normally are engaged in providing products in bulk quantities to large retailers or small businesses at discounted prices. If they procure wholesale products which are outdated or not in demand they are likely to suffer huge losses because large quantities of wholesale products can be wasted without accurate forecasting. This is even true for the wholesale manufacturers. They are required to start the production process well before the requirement of the products in the market. And when they realize that they have produced something that is not in demand nobody can save them from suffering heavy losses.

Therefore wholesalers and manufacturers need to estimate accurate future demand on the basis of reliable information. Accurate demand forecasts even become more important for the wholesale starters as they are newbie in the market. It becomes difficult for them to neutralize the effect of these losses in the start and as a result they can be thrown out of the market.

Product demand forecast:
Accurate demand forecasts are very much important for the wholesalers or suppliers as it help them to estimate accurately the quantity required in the near future. It also gives insight on when this wholesale product quantity will be required and in which markets. This helps them to plan out their entire business activity in advance. Let’s see how accurate demand forecasts help the wholesalers in accurate management of capacity and logistics and how it builds stability in operations.

Accurate inventory management:
The importance of accurate demand forecasts for inventory management cannot be denied. Demand forecasts tell what quantities are required so the wholesalers and suppliers plan out their levels of inventory on the basis of these forecasts. They are not required to stock up their warehouses with large inventories and are in a position to save their storage cost as well. They order exact quantities required to meet the future demand. Besides that, it helps them to measure the exact quantity of safety stock required for emergency situations. Such accuracy of inventory levels is only possible by accurate demand forecasts.

Accurate capacity management:
Perfect demand forecast helps you in knowing what quantity, workforce, time for manufacturing or sourcing wholesale products and manufacturing process you need. It further helps you to set your sales goals and targets so it becomes easy for you to devise effective plan of actions to achieve them. These forecasts give you enough confidence and prepare you for in time sale. Besides that, accurate demand forecast builds stability in your operations and helps you to plan out pricing policies in advance.

Poor demand forecasts results in wastage of finished products and inventories. It also shows your lack of experience in the industry. Therefore it is important to forecast the demand accurately and that can be done through acquiring information from wholesale industrial experts and professional. Consumer surveys and research papers are also important sources in this regard.

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How practical is a drop shipping business?

Dropshipping is a part of supply chain management. It requires really low investment as a dropshipper needs not to buy the whole lot of different products instead he needs to have catalogs of products which are showed to customers as sample products. When a customer places order the dropshipper contacts the supplier and the products are shipped or delivered directly by the supplier to the customer.

Although dropshipping retailer does not keep the goods in stock, he may keep samples on display in stores in order to enable the customers to inspect an item similar to what they are going to purchase. The retailer may also maintain website or a catalogue to serve the same purpose. In this way drop shipping provides a good degree of convenience, whereby the retailer get free from the hassle of keeping the goods in stock.

There are many significant benefits of the dropshipping process, through which it provides a great deal of practicality. Firstly, dropshipping eliminates upfront inventory. Secondly, it results in a positive cash flow cycle as the seller is paid when the purchase is made. The seller pays the wholesaler by means of a credit card or credit terms. Therefore, there occurs a period of time in which the seller has been paid by the customer but the wholesaler is yet to be paid. Drop shipping also provides practicality in that it effectively eliminates some duplication of effort, as one warehouse is eliminated from the process and the product is picked, packed and shipped by just one warehouse. As a result of dropshipping, total inventory management and shipping costs are reduced. These cost reductions result in lower costs to the customer.

The major advantage of dropshipping is that the retailer does not have to make an upfront payment to stock products. The retailer can simply start his business by displaying sample products. The benefit of this approach is that retailer faces low risk. If the product is not in demand, it is the dropshipper or the wholesale supplier who have to suffer and not the retailer. No upfront investment means that the retailer’s start up cost is extremely low. It saves the retailer from the hassle of having to invest a fortune to buy inventory. Yet another way in which dropshipping provides practicality is that the dropshipper takes care of product delivery and shipment for the retailer. The retailer’s warehousing costs are saved. In addition to this, drop shippers do not impose a minimum quantity order.

What can be the competitive edge in a wholesale business?

Wholesale

Wholesalers have a rather limited set of customers, and when they lose one of these customers, it is quite hard to regain, because wholesale buyers do not change their suppliers as often as the individual customers. Therefore, as a wholesale business, you have got to have some competitive advantage right from the onset, to be able to win as many customers as you can. Gaining a competitive advantage is not difficult if you know your customers and their requirements.

Price:
When you are dealing with commercial users, there's no competitive edge more compelling than the low wholesale prices. If you are starting as a wholesaler in an already saturated market, you have got to start with offering somewhat lower prices than your counterparts. You can do this by going for lower profit margins, or even better, by finding a cheaper source or supplier for your targeted products. Retailers will need no second invitation when they see a supplier offering low prices and high profit margins.

Lead-time:
Having a better lead-time than your competitors can be a huge competitive advantage. There is always some delay between the time when you receive an order and the time when you deliver the products to your customers. Distributors can not eliminate the lead-time, but they can surely reduce it. Besides, you've got to provide your buyers with an accurate estimation of the lead-time so that they can adjust their replenishment process accordingly. Inaccurate information of lead-time will result in some inventory related problem for your customers and they will just move on to another supplier.

Payment Terms:
If you are not able to offer lower prices, you can still have an edge over your competitors by providing better payment terms. For example, wholesalers can offer perks on big orders or discounts when the customers make the payments in a given time period.

Value added Services:
There's so much you can provide to your customers, other than the actual products. For example, you can provide them with training or information about the products that will help them provide better customer service, or you can keep them updated about the possibility of up coming trends or demands.

Packaging:
Branded products come with their own packaging, but when you are providing non-branded products, you can always come up with better packaging. Talking of the retailers, you can also provide support and ideas to the retailers to help them improve their display.

The importance of safety stock in your wholesale business

You can improve your replenishment process or reorder points for all you want, but there are times when the actual demand or supply will nullify your estimations and you will find your business getting out of stock. It doesn't matter if you are a manufacturer, distributor, wholesalers, or retailer, finding out that you are about to get out-of-stock is never a pleasant information (in spite of the fact that some businesses will prefer it over ending up with overstock). The fact of the matter is that getting out-of-stock can result in serious interruptions, and eventually loss of business. For manufacturers, it can halt the production process, for wholesalers and retailers it may result in dissatisfaction amongst their customers.
To save themselves from this situation, businesses maintain a safety stock which is also known as buffer or cushion stock, since it provides a cushion against getting totally stock-out. If you are running a business where the demand or supply can rise or drop to abnormal levels within a short space of time, then probably you should maintain a safety stock to save yourself from these situations.
On the other hand, keeping a safety stock can prove to be too costly for small businesses, because of the costs involved in purchasing and storing the inventory (especially because safety stock is mostly a non-moving stock). Wholesale businesses, which are already looking to cut costs, might not appreciate the idea of spending their (already limited) capital on safety stocks.
Usually, safety stock is necessary when you are entering into a new business or a new market, once you get more familiar with the demand and supply; you can improve the accuracy of your demand forecasting and minimize the need of safety stock. However, no matter how accurate your forecasting is, certain mishaps or incidents can take place, resulting in your supplies getting blocked, so you need to keep these events in mind.
There is no recommended formula for calculating the minimum required level of safety stock for a wholesale or retail business, and each business can choose to use their own formula for safety-stock. Coming up with the minimum level of safety stock requires you to look at the lead time, and the time alternative supplies will take. Also remember, that you need to review your safety stock on quarterly or yearly basis, and make adjustments (unless you’ve got some computerized program for safety stock level that automatically adjusts according to the demand).

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Mistakes the wholesale representatives must not make

When we compare the job of a wholesale representative who is targeting only the business users, to the job of a sales representative who can target all kinds of customers, we will notice both positives and negatives linked with the job of a wholesale representative. It's true that a normal sales representative has much bigger market to go for, however wholesale representatives can look at this limitation as a blessing in disguise. Because of relatively fewer clients to target, they can focus on each prospective customer and come up with a more customized marketing plan. At the end of the day, wholesale representatives are not supposed to bring as many clients as the typical sales representatives and only a handful of orders, every now and then will do the job.
Wholesale representatives and also manufacturers representatives need to be a bit more professional in their approach since they are dealing with the business owners or influencers in large organizations, and ticking off any of these people will spoil a great opportunity. Following are three things that a wholesale representative must avoid.
1. Being overly Formal:
Some salesmen make the mistake of confusing the confidence with an arrogant or casual approach, being casual might work with commonplace consumers but when you are visiting a workplace, you have to maintain a thoroughly professional conduct. It can get really annoying for your clients if you just show up at their offices, at busy hours, without taking an appointment, and try to act cool. With such non-professional attitude, it’s hard for them to take you or your product seriously, if anything they'd be looking to show you the door instantaneously.
2. Not working on your sales pitch:
You might succeed in convincing individual customers into buying a product from you, with the help of your sweet-talking abilities, but when it comes to the businessmen, these tactics are not going to pay off. You must apprehend that most of your prospective customers are doing the business for quite some time, so they can easily tell when the sales person is trying to be too smart. Therefore your sales pitch must be to-the-point instead of mere hogwash consisting of denigrating other wholesale products in the market, or trying to highlight some advantage that is not really there.
3. Not taking their refusal as the final word:
Businessmen are quite clear in their mind when selecting or rejecting a supplier and they have got solid reasons to do so. Therefore when a business has rejected your offer, there's no point in going back to them soon after, with the same product, and hoping that they'll change their decision. However, you can get in touch if you have got new products to odder, or your wholesale company has decided to slash prices.

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Quality control when sourcing products from suppliers based in low cost regions

People have an often biased opinion, both in terms of quality and durability, when it comes to products being manufactured in low cost regions like China, India, Vietnam, Mexico, Thailand, etc. To be fair, that might have been the case some years ago but labeling all products made in China (or any other country known as a low cost region) as substandard replicas is practically as correct as referring to Russia of today as Union Republic of Soviet (USSR).
That's just to tell that not all wholesale products being made in these countries are necessarily of low quality. However, it doesn't mean that you shouldn’t worry about the quality altogether, because when you are looking to source a product at lowest possible prices, you should expect some compromises being made on the quality of the products. Therefore, when you are getting your merchandise from wholesale suppliers or manufacturers based in these regions, you must ensure that the quality of the supplies is reasonable. There are two ways of doing so.
Method 1:
First method is to appoint someone to keep an eye on the entire process, from raw materials to assembling, and packaging to shipment, and make sure that the suppliers are following the standards. Such scrutiny requires a competent person who is well aware of the quality benchmarks. You can hire someone from the same market or send off some of your employees to the place you are sourcing from.
Method 2:
If you are finding it hard to find a suitable person to perform quality check on your behalf, you can opt for signing up with a specialist firm. Many firms in such regions are providing similar services, and because they are based in that particular region, they have a good understanding of the local markets, which means they will be able to keep an eye on the entire process.
For small businesses:
Abovementioned scenarios are good for relatively large businesses, but not so feasible for small businesses. If you are an online retailer and looking to source products from Indian or Chinese suppliers, you cannot afford to hire a person or firm to do the quality control on your behalf. What you can do is to take help from reputable resources like B2B networks or wholesale directories, in particular, the listed members with trusted or premium logos, after confirming that they are providing some kind of quality assurance.

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Is it more profitable to deal directly with the manufacturers for wholesale supplies?

Choosing the right wholesale product sourcing decides the fate of a retail business. It is important to examine different procurement modes and then deciding the best one from them. Buying channels can be classified into different classes, like directly from the manufacturers, from distributors or from wholesale suppliers. Each mode has its particular pros and cons but it depends upon your specific needs as to which method is more preferable and profitable for your business. The task of choosing the right source can get easier if you have a complete list of your needs and requirements.

End customers need constant supply of quality products and that too at the right prices. Deciding the right supplier is necessary for all business involved in this supply chain. There can be huge difference in prices of the products of same quality and the difference lies in the fact that businesses are getting their products from different sources. The one selling at low price obviously has got the products at low prices, while the one selling at higher price must be buying at high prices from suppliers.

Not all procurement methods are suitable for a wholesale business, and there’s no single type of supplier that we can recommend as the best available option. The buyer determines the specific mode depending upon the size of wholesale business and available procurement channels. However, getting the products directly from the manufacturers can be the most low cost option.

Getting wholesale products directly from small sized manufacturers or producers is often a profitable deal because they will sell at amazingly low prices. Their operating costs are less and because there is no middle man involved, which means they can sell at relatively lower prices. Manufacturers will prefer to sell directly to customers because they don’t have to pay commission to some distributor or wholesaler to do the selling for them.

When you are buying from a middleman or broker, they will surely charge for providing its logistics services and it will make the wholesale products more expensive. The more the people involved in this process, the more higher the price will get. Also when you are dealing with the manufacturers, you can ask for specific changes or customization in the products which can be a great competitive advantage.

These all are just some of the points to highlight the benefits of dealing directly with the manufacturers, however you may have to arrange for the shipment or delivery yourself.

Legal considerations while exporting to USA

USA has devised certain procedures which all exporters have to follow. One of these procedures is to ensure that appropriate duties and fees are paid which also includes legal documentation. Getting US export license is a basic requirement for exporters in USA. This procedure may appear complex, but in most of the cases it is a rather simple process. Exporters of USA wholesale products should remember that violation of the Export Administration Regulations (EAR) carry both criminal and civil penalties. Mainly there are two kinds of exporting license, which are General Licenses and Individually Validated Licenses

General License and Individual Validated License
General license is granted to all exporters by the US government who meet certain categories of products. Individually validated license is a specific export license granted to the exporters from the authority of Export Administration Regulations of US government. This license is granted on case-by-case basis on export of some particular products.
It is necessary to determine that what kind of license you need while exporting from USA. This can be only determined by checking the kind of product being exported and its destination. Check the ECCN (Export Control Commodity Number) to determine in which category the particular commodity falls. To avoid any type of confusion, all exporters are always advised to consult US Department of Commerce's Exporter Counseling Division. Remember that if you are looking to trade in USA market then you will have to get a separate license meant for wholesalers.
Taxes and Duties
Always keep in mind that all export products of the US are zero-rated for VAT and there are no additional export taxes. But your product may be liable to import duty and the levels of duty vary for product to product. In order to compete with local suppliers, you will also have to quote a price fully inclusive of all prices. In short there are no additional US taxes which you are liable to pay on export sales.

On other hand if you are looking for opening a local store, or looking to establish your presence in US then you are liable to US taxation. Again if you use a local distributor then the sales of your products will also be subject to sales tax. It is better for every amateur exporter to take advice from any accountant who has experience of US taxes and regulations.

Other Legal Aspects
While doing export business in the USA wholesale market, always remember that all transactions are mainly done on credit. Besides this you should also protect yourself against the risk of non-payments because the processes of payment chasing or legal actions in the US are quite time-consuming and expensive. In order to compete with local traders you will have to do all dealings in Dollars, which means you are at risk if exchange rate fluctuates. Lastly you should always remain careful and product your business intellectual property when trading in the US. It is very important if you want to stop other people from exploiting your ideas and business logo.

Following all these legal considerations an exporter can easily become successful in USA market.

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