written by | October 11, 2021

How to Start a Wholesale Distribution Business?

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Table of Content


Wholesale distributors are companies that trade goods to earn the purpose of earning a profit. They provide goods to retailers, who later sell them to customers. Most wholesale distributors in the retail sector purchase customised products from a manufacturer, distributing them to retailers. 

Before, managing wholesale companies could have been limited to printing cold-calling, catalogues or doorstep selling and entering data into spreadsheets. There are alternatives to handling your company and getting your product accessible, like creating a wholesale eCommerce B2B business. 

If you're looking to begin a wholesale, retail business, or want to find distribution opportunities, here are the essential steps for you -

Did you know?

Government initiatives like Credit Guarantee Funds Scheme (CGFS) and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), among others, can help small business owners to start wholesale distribution businesses.

Starting a Wholesale Distribution Business

The following section illustrates the exact steps to start a wholesale description business.

1. Business Plan

The wholesale business is a person or a company that buys goods from suppliers and distributes the goods to retailers. Wholesale distribution businesses serve to act as a mediator between retailers and manufacturers. 

This business is thought to be profitable because of the wide range of business models available across the country. 

Here are some of the most notable advantages of a wholesale organisation:

  • Wholesalers purchase goods at a lower cost from the manufacturers, and they also are known for buying in bulk from producers.
  • The commercial cycle between a wholesaler and the manufacturer may vary based on the business's kind and character.

To begin wholesale distribution businesses in India, one must keep a few actions in mind. Due to the abundance of manufacturing facilities in India, wholesale companies have a wealth of possibilities. 

They manufacture various textiles, chemicals, pharmaceuticals and FMCG products. This type of business ensures the credibility and profitability of its main competitors. There are a few steps to beginning the wholesale distributor company:

Selection of the Product: Choosing the item to sell is the primary task of the distributor. You should select products that are highly sought-after within the market. The comprehensive market research will also help determine the product's popularity and profit margins.

Establishing the Warehouse: The warehouse where the wholesale items are stored is the following step in setting up an organisation for distributors.

Maintaining a Good Relationship With Suppliers: Choosing the best suppliers for the items one decides to distribute is essential. It is also important to connect with established and trusted suppliers in your area who have the flair and know-how in the business.

Wide Your Connection: Establishing new contacts, dealers, and suppliers is also crucial in the supply chain. If there are many established contacts with dealers, wholesalers are likely to earn good profits over the long term.

Making a Credit Policy: Establishing appropriate credit terms and conditions will yield more benefits over the long term. There will be many suppliers that encounter financial issues when buying the items at this particular moment. Therefore, you should keep the credit policy to ensure your wholesale distribution business is secure.

Making Documents for Licences: To operate a distributor company, you must obtain an authorisation to distribute. It is also necessary to register the business you own and secure legal approval to begin the distributorship company.

Controlling the Successful Establishment of the Wholesale Business: It's crucial for business owners to keep track of business transactions continuously. It is also beneficial to establish a relationship with other companies and dealers who will be providing the goods to be sold.

Also Read: 10 Best Wholesale Business in India 2022-23

2. Finding the Best Product

Many manufacturers are making massive quantities of products. One must seek out the product in high demand or the demand for any product that appears to be growing in the future.

Thorough market research then narrows products that keep the market thriving, including clothing, groceries, food items, products, etc. Look for items that require minimal or no maintenance so that the buyer does not have to worry about losing money. 

3. Create Enough Space

Find a large enough space to be a warehouse place for your items to be stored. One can rent, lease it out or purchase a storehouse for your storage space for products. Be sure to locate the areas close to the retail outlet to make transportation easy. You must create enough space for your employees and sales staff to be seated together to make delivery and pickups quick and easy.

4. Identify Your Dealer

In the case of a wholesale distribution company, the distributor or dealer serves as limbs without which the company cannot move even a centimetre. Find your dealer with care and verify his legal documents and work permit and licence to ensure your company's safety.

Once the dealer has been recognised, it will make a huge difference in the event of supplier and shipping issues. Be sure to contact the dealer directly to prevent delays in transportation and shipping.

5. Control Your Inventory

There are many aspects to effective inventory management, one of which is maintaining enough inventory. Although it's your responsibility to market your products in large quantities, having excess inventory isn't good for the financial health of your business. 

You must be aware of the calculations for inventory, including lead times, recorder levels and the security of your inventory, to ensure that you don't hold any inventory that is beyond your requirements or wasted. A good inventory management system will aid in tracking your orders across channels more efficiently.

6. Ordering Online

Many wholesale distributors still take orders with old clipboards and paper forms for orders, even in this modern age. Some have taken a step toward using technology, using order forms in PDF or Excel spreadsheets. However, these options are as awkward and, in some cases, more than the paper. Also, before you make payments, make sure to avoid scams with e-wallets.

As technology advances, many successful companies are using the ability to write orders on mobile devices. Also, they give sales representatives access to customer data and product catalogues and an order-writing interface on their devices like laptops, tablets, smartphones, etc.

Also Read: How to Start A Reselling Business In India?

Wholesale Business Ideas for Businesses Without Investment

There are a lot of business ideas that you can implement with ease and with a small amount of money. Small business ideas can include:

Home decor stuff made by hand: Gift items and hand-crafted artefacts are well-known small-scale businesses that you can set at a small cost.

Ice cream cones: The ice cream business is an opportunity to make money because people are awed by these sweets.

Homemade chutneys and pickles: Yes, you make them. It can also be among the best desirable small-scale business tips and ideas with a low expenditure cost.

Paper bags: Paper bags are an ideal alternative to plastic bags. Also, it’s an environmentally-friendly product. The manufacturing and selling of bags made from paper is an excellent small-scale business plan.

Candles and incense sticks: Handmade incense sticks and candlesticks can effectively earn money for local labourers.

Small business ideas like these are easy to get suppliers and become successful wholesale companies in the long run.

Conclusion

One of the most efficient and well-known methods of connecting with customers and selling your goods is by participating in the wholesale trade show for wholesalers. Retail trade shows can draw your ideal customers and provide an opportunity to sell your products to retailers of any size. Selecting the right trade show is essential, as is the size, location, visitors numbers and prices should be considered.

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FAQs

Q: Is the wholesale business profitable?

Ans:

The wholesale business idea is a highly profitable business option available in India. The goods reach customers from a chain of suppliers, creating business opportunities for wholesalers. Wholesalers buy the goods from the manufacturers at a slightly lower rate.

Q: Which Is the most lucrative distribution business idea?

Ans:

If you're planning to start a distribution company, the following are the most fabulous ideas:

  • Electrical appliances
  • Automobile products wholesale
  • Building and construction Items
  • Beauty products
  • Gifts and handicrafts Business 
  • Rubber and latex Business
  • Wholesaler of grains
  • Glassware wholesale business

Q: Is it possible to become a distributor from home?

Ans:

Yes, it's entirely possible, but only if you've got enough space in your home to store the inventory and a place where you can have meetings with your clients.

Q: How to start a wholesale business?

Ans:

Before starting a wholesale business, you need to determine the targeted crowd to whom you will sell your products. Do the beforehand research and figure out which are the best retailers to come in touch with. Most importantly, your market needs to be huge. However, you can begin the journey from a small base and later on expand.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.