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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