Everything you should know about wholesale [2023]

In many ways, understanding wholesale is a key part of understanding how economics works in the real world. Standing as it does between manufacturers and retailers (and therefore end customers), wholesale clearly demonstrates a wide variety of economic concepts at work – division of labor, unit costs, inventory management, distribution, and much more.
Ayoub Assabban
Ayoub Assabban
June 29, 2023
mn. read

What is wholesale?

No matter the industry or location, wholesale is based on one word: bulk. Wholesalers buy and sell products in bulk, which is to say that they deal in large quantities. 

Retailers operate at a different level, selling individual items to everyday customers. Similarly, manufacturers operate on a different level, crafting items that can eventually make their way down into an individual’s hands. Wholesalers are the ones buying those items from manufacturers and supplying them to retailers, with the caveat that they aren’t dealing with them one at a time, but instead dozens, hundreds, or thousands at a time.

As such, wholesalers can be involved in both the movement of a piece of merchandise from business-to-business (B2B) and from business-to-customer (B2C). Many wholesalers, however, are specialized in B2B products – think about zippers that only arrive in the consumer’s hands as part of a pair of jeans, or tires that only arrive as part of a car, or furniture legs that only arrive as part of a couch.

No matter the type of product they’re dealing with, wholesalers buy and sell large quantities, doing business with a (relatively) small number of producers and buyers

At least, that’s been their traditional role. Today, there are new possibilities that have arisen thanks to e-commerce, giving consumers the opportunity to access better prices without overwhelming the logistics capabilities of wholesalers. 

How does wholesale work?

Wholesale (and manufacturing, and retail, and much more) is based on the fact that it’s impossible for any one person or firm to do everything. From Plato to Adam Smith, Immanuel Kant to Émile Durkheim, there has been no shortage of study showing that economic benefits arise thanks to divisions of labor.

In terms of wholesale, the division of labor exists because it takes a very different set of skills to create a product than it does to ship it around the world; and shipping a product around the world requires a very different set of skills than selling it to the grandma down the street or the construction foreman. At each step in a product’s lifecycle, it needs specialized care.

Let’s think about the lifespan of something simple, such as a spool of thread. A textile manufacturer is churning out thousands of spools in a factory somewhere; those spools are in demand in every country around the globe. 

A wholesaler in, say, Mexico will buy 10,000 of those spools in one order, obtaining a cheaper unit price thanks to the fact that they’re buying in bulk. They will then turn around and offer those 10,000 spools to various retailers in their area, selling them at a higher unit price to account for their logistics and supply costs. 

The retailer will then offer a single spool for sale at a price that fits the individual consumers who may walk into their store looking for a bit of thread to mend some clothes.

Or, in the B2B realm, we can take the lifespan of a zipper. Millions of zippers are being manufactured in a factory, able to be used in a wide variety of products: children’s clothes, adult clothes, purses, cushions, …

A clothing brand in France may then want specific zippers for their new run of pants. They’ll find a wholesaler who can deliver 1000 zippers to them, quickly and at a good price, so that they can manufacture their clothes. Those clothes may then be sold via their own shop (if they have a retail operation) or via a separate set of retail establishments.

The wholesaler may be selling their zippers to the French pants maker this morning, to an Italian furniture maker this afternoon, and to a Dutch purse designer tomorrow. 

Okay, but how does it work? 

For decades, wholesale business has been conducted via phone, then fax, and then email. Wholesalers have a catalog of products available, and their various customers contact them to place purchase orders. These orders are then registered, fulfilled, and shipped.

At each step of the process, one thing becomes clear: building a thriving wholesale business means being a master of logistics.

That might sound straightforward, but the path to mastering logistics is often full of frustration. Let’s take just one step: the manner in which customers place their orders with a wholesaler. Because that ordering process has remained largely manual, it’s time consuming for everyone: the customer who has to write or type out a list of what they want, then sending it along to the wholesaler; the wholesaler who receives and transcribes the order, passing it into their fulfillment system; and then the back-and-forth between the two to finalize payment, provide shipping information, track the order, and resolve any problems.

And the very nature of manual work means there are lots of areas where errors can creep in: a product number is transposed in an email, someone on the phone hears 640-0023 instead of 64-0023… Plus, that doesn’t even account for a range of issues that arise without any error being made at all: a customer having to call back to add another item to their order, someone wanting to change the shipping address, and so forth.

Still, wholesalers were largely able to deal with these issues because of the bulk nature of the business. Because they have a relatively restricted number of suppliers and customers, things could be a bit messy while largely staying up and running. 

That is, until something happened to shake things up. Many wholesale businesses are family-owned and operated, often with employees who have been in place for decades. The mental load that those people carry while performing manual operations can easily lead to chaos when that kind of institutional knowledge leaves via retirement or succession. 

What’s different now?

Like every other area of our lives, digital tools. Now, no one could say that wholesale has been at the forefront of the digital transition – heck, it’d be hard to even say that it was in the middle! Much of the wholesaler industry (and their customers) has stuck with manual ordering and fulfillment processes, creating a broad disconnect between the wholesale shopping experience and most other modern shopping experiences. 

In short, digital tools are bringing improved logistics to the wholesale industry, and everyone can benefit. ERP systems are becoming more popular, giving owners and operators more clarity on many aspects of their businesses (from finance and HR to procurement and supply chain). Communications are becoming more centralized, at the very least by an expanding use of email. 

Yet one of the most promising new tools has been relatively slow to catch on: online ordering. Most wholesalers across the world still don’t have their own B2B e-commerce site, for a few reasons that you’ll hear over and over while speaking with them:

  • Cost: Too many wholesalers have been burned by bills for creating a bespoke e-commerce site that could easily run into six or even seven (!!) figures, and all that for sites that don’t really deliver a great experience for wholesalers or their customers. 
  • Complications: Some wholesalers already use an ERP, some don’t; some have been on Excel for decades, others haven’t… Everyone’s system is a bit different, and that has often brought them back to the problem of cost, with far too many digital agencies taking advantage of that to sell them expensive site development services.

To say the least, that’s a real shame, because there are huge benefits to both wholesalers and their customers from making the leap to e-commerce.

Key benefits to digital ordering in the wholesale industry

Better customer experience

The rise of e-commerce might have started with consumers (Amazon, Alibaba, Zappos…), but it can’t end there, simply because we are now accustomed to that kind of experience. A quick search, a click to put it in the basket, rapid check-out followed by an email confirmation are what people expect – no matter if it’s a personal or professional purchase.

The ease of today’s online shopping experience means that having to phone or fax an order in isn’t just old-fashioned, it’s downright annoying. That’s why it’s so important to bring B2B e-commerce to wholesale: it eliminates that annoyance, and – when done really well – can even turn B2B ordering into a pleasant process.

Better communication

By shifting to online ordering, wholesalers can bring the vast majority of their communications with customers into one platform. Instead of having to keep track of multiple means of communications, wholesalers can simply log in to their computer and then easily read and respond to their customers.

Online messaging makes it easy to go back into a conversation history, send automatic reminders, identify customers who are still waiting on an answer, and more.

Reduce errors

A manual ordering process is a sieve, with lots of little holes where errors can creep in. A customer might make a mistake with a product number, someone listening on the phone might hear a “fourteen” instead of a “forty”, that “7” on the fax printout might look more like a “1”... 

Online ordering can reduce many of those errors. Indeed, there are OrderCast customers who have reported cutting down on ordering process errors by 80% within the first few months of opening their online shop. 

Save time

Fewer errors, no time spent transcribing orders from one place to another, more fluid communications… it all means that wholesalers are wasting less time on aspects of their business that should just work.

Plus, with an e-commerce site wholesalers are effectively able to process orders 24/7, no matter where the customer lives, no matter what language or currency they want to use. A customer in China doesn’t need to wait 8 hours for an order confirmation coming from Europe, and wholesalers don’t need to rush through a bunch of orders that arrived during the night as soon as they walk in the door every morning. Urgency gives way to steady progress, which is always a more comfortable way of working, even while the ordering and fulfillment processes are speeding up!

More customers

With more time to spend on adding value to the business, opening an e-commerce site can let wholesalers concentrate on expanding their business in terms of both revenues and profits. Whether it’s by serving new geographies (in no small part thanks to a site available in multiple languages), identifying and prospecting in new sectors, or simply putting more effort into their home market, having a B2B e-shop can help wholesalers to serve more customers, better.

Notably, this can also include smaller customers. Because wholesale is based on bulk, many wholesalers have privileged serving a small number of large customers. That made sense, since the manual ordering process restricted the amount of customers the wholesaler could serve. But with B2B e-commerce, wholesalers are no longer restricted by their ordering process, able to process (many) more orders for (many) more customers in the same amount of time.

Larger orders

A customer who places an order by looking through a 200-page catalog and then sending in a fax isn’t going to spend time flipping through to see if there’s anything else they might need. But a customer looking at a beautiful e-commerce site can easily see related items that their own customers could well want to purchase.

The convenience of online shopping makes it easy for customers to move toward different products, expanding their offering while boosting your total basket size. 

How OrderCast delivers a great e-commerce site for wholesalers

OrderCast was built by wholesalers, for wholesalers. As such, we started by wanting to  solve those big problems that have been preventing lots of wholesalers from making the move to e-commerce:

  • Cost: Wholesalers don’t need a bespoke site – they need a site that works, period. Our first goal was to provide a standardized service that could be personalized to fit our customers’ unique brands, for a price that avoided setup costs and matched their online sales volume. 
  • Complications: ERP or no, Excel or no, OrderCast is designed to be used by any wholesaler, no matter their current organizational setup. If some digitalization has already been done, that’s great, it’ll make the early days even easier. But if your business is just getting started on digitalization, that’s fine – OrderCast is here to make things run super smoothly.

What are some of the highlights of using OrderCast?

Catalog availability and flexibility

Your products are visible in your e-shop quickly, and you can easily manage any changes using the intuitive OrderCast back office.

A great search experience

Your customers will find what they’re looking for, fast, using whatever keywords or references they prefer. They can add items to their basket, including by selecting any necessary parameters, and head directly to checkout. They’ll also easily see related items that could reasonably be part of their purchase, as well. 

Customer management

Your customers have their own account, including order history, order status, shipping and billing information, etc., guaranteeing an easy shopping experience.

Plus, there’s the more general benefit of simply future-proofing your business. Whether in terms of current customers, prospects, or even potential employees, having a digital ordering process makes your company more attractive. The fact that OrderCast makes it all exceedingly simple and affordable? Icing on the cupcake 😎

--- --- --- --- ---

A great wholesale business is one that has mastered its logistics. With the ordering process being the first step in the logistics flow of your business, optimizing it with OrderCast just makes sense.

So get started with OrderCast today, and have your wholesale e-commerce site up and running in a matter of days, if not hours. Our team is here and ready to help 💪🚛💪

Published by
Ayoub Assabban

Tired of managing purchase orders manually? Try OrderCast!

Book a demo with our Sales Expert to discover how OrderCast can help streamline your wholesale business and increase your revenues.

Contact our Sales Experts
Michael Saifoudine, OrderCast
Photo Kirstin Olson
Photo Laura van den Herrewegen
We'll get back to you within the hour.