For businesses dealing with procurement challenges, partnering with the right supplier(s) is crucial. Fostering long-term, mutually beneficial agreements with professional distributors and wholesalers can be a convenient workaround, with these agreements offering companies a host of benefits that enhance procurement, from cost savings to flexible payment terms.
However, partnering with the right wholesale supplier(s) can be more challenging than you imagine. If companies are to witness efficiency improvements, greater cash flow forecasting and stabilisation, and increased returns, then fostering the right partnerships is not something to overlook. Luckily, with the right approach, wholesale business relationships can pave the way for even more benefits, for companies undergoing a period of change, expansion, or upscaling.
This article explores key – lesser-known – benefits of mutual wholesale agreements.
Wholesalers can leverage economies of scale to offer competitive pricing and premium products. Product selection is something that many buyers crave, particularly in competitive marketplaces like retail and hospitality.
Distributors and wholesalers often carry niche items that may be incredibly challenging for buyers to find elsewhere. In a retail or hospitality context, this could range from purpose-built ornaments from independent craftspeople to artisan speciality bread from family-run Italian bakeries.
Procurement teams have the advantage of working with specialist distributors and wholesalers to gain access to a more diverse range of goods rather than working directly with manufacturers or suppliers. By consolidating orders, better rates can be negotiated, which can drastically improve a business’s bottom line.
As distributors often buy products in bulk from manufacturers, they can offer convenient purchasing rates and volume discounts to buyers, reducing the number of intermediaries in the supply chain. As such, buyers can see more transparent and evident profit margins, allowing them to be more competitive in their pricing strategies, potentially enticing more customers to buy at cheaper prices and thus gaining an advantage over the competition.
Local distributors contribute greatly to economies and supply chains, but they’re often restricted by limited stock and fulfilment capacity. Wholesalers with deeper supply chain partnerships can often source from various manufacturers and vendors in bulk, thus offering a broader product selection, and more product varieties and brands for buyers.
Not only that but established wholesalers and distributors often have multiple warehouses and storage facilities throughout a supply chain. Buyers can often be incentivised to request trial batches, to test suitability before committing to larger bulk purchases, and established wholesalers can often fulfil this with confidence.
Furthermore, in an attempt to gain a competitive advantage, distributors may offer buyers customisation options. This can include logo printing, branded packaging, and other services, to empower buyers to test new offerings, enter new niches, and scale production as needed.
Buyer-supplier relationships in modern supply chains are largely built around the optimisation of cash flow. Wholesalers and distributors often acquiesce to offering extended, flexible payment terms for the benefit of buyer loyalty, sometimes as much as 90 or 120 day payment windows. This provides buyers with a cash flow incentive to fulfil payments months after they have recouped funds from consumer sales.
However, wholesalers and distributors often have access to flexible fast invoice financing from firms, ensuring that they are not disadvantaged by cash flow constraints while waiting for invoices to be settled. While this does often involve intermediaries to bridge payment gaps, it provides peace of mind and flexibility for both parties in a supply chain.
Agreeing terms upfront and scheduling regular reviews to ensure the relationship remains mutually beneficial as business needs evolve is worth pursuing.
Wholesalers often run special promotions like cash rebates, extended credit, and bulk discounts exclusively for trade partners. By fostering a mutually beneficial relationship with your distributor(s), you can gain access to the following (but not limited to):
The savings and exclusive offers help drive higher margins or can be passed to customers to drive demand and interest in products. Ensuring that any terms do not conflict with existing promotions or erode profits entirely will, however, be a constant mitigation challenge for companies.
The right wholesaler and distribution partner doesn’t just provide cost-effective prices, wider product selection, and greater customisation opportunities. They work as a de facto extension of a company’s operations team while working at a level that aligns with its values and commitments.
Given that distributors and wholesalers often specialise in specific products or sectors, they recognise the end consumer’s needs and pain points, and thus, are better equipped to deliver solutions that work best for buyers.
The right wholesalers will work diligently to deliver dedicated management of a buyer’s account, from onboarding to ongoing maintenance, while providing easy-to-use platforms to allow them to track and place orders in real time. Escalating delivery issues, product defects, and supply shortages during unforeseen demand spikes will be easy when the right supplier-buyer relationship is built.
Establishing this supply-side support allows buyers to focus on key areas such as sales, marketing, customer service, and growth.
Landing the right wholesale partner involves balancing numerous factors, including pricing, product range, service reliability, fulfilment terms, SLAs, and so on.
When evaluating wholesalers and distributors to partner with, consider the following for each firm you approach:
Initially shortlisting suppliers based on the above will pave the way for more in-depth, concerted discussions about capacities, programmes, processes, and rates. Where possible, referrals and testimonials should be sourced and confirmed from other buyers – though not necessarily ones in the same industry and sector as yours.
Making the right wholesaler choice is a difficult process, but one that will reap maximum lasting benefits for companies trying to navigate complications in procurement and fulfilment. Once everything aligns, these partnerships can provide immense short- and long-term value as more businesses scale through fluctuating supply and demand. In an economy as turbulent as the one of 2024, building resilient, reliable partnerships will prove valuable.