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.

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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.

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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.

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