A New Niche in Wholesale Economic Model
During difficult economic times healthy companies trim chaff and generally strengthen and re-align themselves while companies that may have been previously successful are reduced to husks and unfulfilled dreams.
There is a third type of company though that does well not because of or in-spite of economic circumstances but because it fills a niche that has been overshadowed by a misconception. That niche is what’s been termed “miniature” wholesale and it is partly responsible for keeping afloat many retailers nationwide.
The concept of a small wholesaler is nothing new, but based on the current wholesale economic model the small wholesaler is at a distinct disadvantage. When it comes to quantity and price it just can’t compete with the big guys.
The old small wholesale model consisted of small wholesalers specializing in one or a handful of different items like say wholesale clothing or wholesale jewelry.
We’ll it’s a new day in the wholesale world where small wholesalers are popping up like locusts and because of a new economic model they have a longer lifespan, only showing signs of becoming more abundant.
Wholesalers demand that in order to purchase their products at a low enough price for a retailer to make a profit that the retailer buys in large quantities. This is a constant snag for small retailers and startup companies because not only does all the stock require storage space, but there is no guarantee what response how we’ll or how fast the product will sell. In the meantime bills are piling up while the rest of the money is stagnating. Especially in tough times this inefficiency can reduce a successful sound small business into a struggling one.
As you can see this is not rocket science and the niche filled by the miniature wholesaler becomes obvious. The small wholesaler buys large quantities of product from the large one, and breaks those lots into a number of smaller lots which he turns around and sells to the small retailer marking up by 10-20% the cost per item. Not a huge markup, and even though retailers are paying more per item initially, it is increasing their overall cash flow and turnover rate, leaving the retailer in a better position financially. And while small wholesalers are generally small startups themselves, some in fact do more business than their more quantitative counterparts.
Miniature wholesalers take a wide range of forms but for the most part they all have an online presence. One of the best examples of a “miniature” wholesale company is Wholesale to Sell. This company was started less than six months ago for next to nothing. The website is hosted for free by Ecrater and their only initial expense was $300 with which to buy wholesale product from another miniature wholesaler with which they broke down lot sizes even more and resold. They are doing over $5000 in revenue monthly as of December 2008 and received a buyout offer from Dollar Days which they turned down with the high hopes of receiving some significant investment capital soon. “The only thing separating E-bay and a couple of other auction sites from the rest of the pack is the amount of items they sale.” Says co-owner Nick McCullough. “Our goal is that Wholesale to Sell will become synonymous with the word wholesale, like E-bay is with auction auction. A half a million dollars could really speed up that process” says McCullough, the man’s exuberant determination not completely disguised by his apparent laid back persona.
“When 6 months into this thing we’re being made offers by big successful companies, it just re-affirms to me the potential we have, so why would I wanna take a relatively small payoff when these well established time proven companies see a bigger one further ahead. In the past as a small retailer myself I know the stress of the bills piling up while sales are slow, and if Wholesale to Sell can help keep a handful of these little guys in business then that will be a real accomplishment. Any one can make a million dollars, but doing it in a way that has an overall positive effect on peoples lives and the environments they live in; that’s a real accomplishment.”
While you can’t disagree with that, I can’t help but wonder how long it will take for these large online wholesale companies to adjust and cater to this market segment as well; thus designating these miniature wholesalers to smaller versions of themselves with less variety. However things turn out one thing is certain; that a free market economy separates the proverbial wheat from the chaff re-adjusting itself in perpetuity. Though the business world is not fair we citizens give our support and therefore also take it away from another every time we make a transaction.
Save money – it is wise during the time of recession – read more on the 0 car finance.
No comments yet.
feel free to leave a comment
All fields marked with " * " are required.
