What A Wholesale Supplier Expects From You - How To Ask For Distributor Accounts
This article is about what a wholesaler expects from you when you are trying to work with them. You will learn how to ask for distributor accounts, understand the process of starting up accounts and the distributor team process, and avoid common mistakes that can cost you time and money. Read on to learn more!
If you're ready to start selling wholesale products with your business, this article is for you; if you're ready to grow at an accelerated pace, a wholesaler account can help. This helpful blog post will provide insights on what wholesalers require of distributors in order for them to approve your request for distribution through their company.
Wholesaler Expectations
The process of going from a retailer to distributor can be confusing and nerve-wracking. A wholesaler's expectations are different from a retailer's expectations. Here are some factors wholesalers look for when dealing with new potential distributors:
Pricing – There are two pricing objectives of distributors that affect their thinking regarding the pricing of products from retailers: (1) competitive pricing, and (2) maximum margin. Wholesalers will want to determine if you have competitive pricing on your product and if you can meet the trade discounts asked by the manufacturer, both of which affect their bottom line profitability.
Pricing decisions are extremely important when dealing with wholesalers.
Sales & Marketing – This topic is very important for the wholesaler to consider, as the value of your sales plan and marketing strategy directly impacts their potential profit. Specifically, wholesalers want to review and evaluate your selling methods, selling capabilities, pricing structure, sales forecast and budget, etc.
Safety stock– Safety stock is additional inventory that's held by a distributor in case of emergency or time delay by the manufacturer to ship product when an order is placed. A wholesaler will not want to know how much of this inventory you have, but rather how you plan on ordering additional product.
What Suppliers Look For in Distributors That Also Sell Wholesale
There are 5 specific expectations that wholesale suppliers expect from distributors that also sell wholesale:
Time to Market – You'll be asked about the time it takes you to order and ship product from the manufacturer. A wholesaler will want to know if it takes your company more than one week to order and receive products, or if you can do a next day delivery. If your company does a next day delivery or orders within 1-2 hours, then your chances of getting approved by a supplier increase.
Build a relationship – It's important to develop a good relationship with your wholesaler's representative. You'll be working with them every day, so it's important that you get along and have a good rapport.
Payment terms – What payment terms do you offer? How long does it take you to pay the wholesaler? If you pay 30 days later after receiving payment from your customers, this may not be an option for a wholesaler who wants to receive money sooner and/or on time.
Key Performance Indicator (KPI) – A wholesaler will want to know what your KPI is on your product. This means they'll want to know how much money you make off of each unit sold (the KPI). If you sell a $5 product with a 40% mark-up and a $5 shipping fee, the wholesaler will want to know what kind of margin you earn on each sale. If your product only generates $1 in profit, this may not be an option for them.
Profit Margin – This expectation is another thing that wholesalers look at when they evaluate your company and the potential profit they can generate from working with you. Are you able to guarantee a minimum profit margin? Can you show them the profit margins of your competitors? How much can they expect to make off of each product they sell to their customers?
Additional considerations:
Manufacturer support – Does your company work with multiple manufacturers in the same industry, or just one? If you have no experience working with multiple manufacturers in the same industry, this may not be a good fit for a wholesaler at this time.
Request for Distributor Approval Process
The process that wholesalers use to vet out qualified distributors varies from company to company. Some wholesalers may use the following systems to vet out distributors:
Request for Information (RFI) from your company – This is a document that's sent to potential distributors requesting details about their company. Wholesalers will want to know about you and your company, including the following: Who you are What your company does How much money you make per month What your gross margin is Your financial statements Your forecasted sales and budget
Checking references – A wholesaler will ask references from a business they are considering working with. The wholesaler may contact previous customers or distributors that you have worked with in the past.
Wholesaler approval or rejection – If you're approved by a wholesaler, you'll work with them on a long-term basis. If not, the wholesaler may provide you with an RFI to re-apply for their company.
A wholesaler is only willing to work with distributors that they feel have legitimate potential to generate profit for them. Depending on the size of their Wholesale Distribution Network (WDN), wholesalers will want to make sure they can fill all of their available open wholesale distribution accounts in the shortest amount of time possible and at the most competitive prices.
Once a wholesaler has evaluated your potential and generated an interest in working with you, it's important that you receive the affirmative decision quickly. This will give your company more time to plan for a long-term relationship with the wholesaler. The sooner you get approval, the more time you'll have to implement your sales and marketing strategies and increase your customer base.
The Main Ways Wholesalers Evaluate Distributors
Wholesalers always evaluate potential distributors in a variety of ways:
Sales Forecast – A wholesaler will want to see what type of sales forecast your company has for them.
Conclusion
The information presented in this post is only a snapshot into the wholesaler world. There are many other things a wholesaler will want to know about your company, such as how much you make off each sale, how your company works with its manufacturers, etc. I encourage you to further investigate this topic if you'd like more information on wholesalers and wholesale distribution.
Wholesalers are essential partners for distributors looking to reach their retail sales goals. With wholesalers, distributors can receive discounts off of retail pricing and they can get product on their shelves in no time at all.
It takes time from when a distributor first has an idea for a product to when that product is being sold in stores across North America.