How to master the wholesale supply chain

By Oleg Mikhailenko
Published in Solutions
August 16, 2022
4 min read
How to master the wholesale supply chain

Have you ever considered getting into wholesaling? Or perhaps purchasing pre-manufactured products from a reputable, high-quality wholesaler in order to bulk out the offerings of your online shop? If your curiosity or business goals have led you in this direction, that means you’ll have to familiarize yourself with the ins and outs of the wholesale supply chain. From manufacturing to white-labeling to dropshipping, it’s wise to inform yourself about all aspects of the industry so you can make sure you’re as prepared as possible. Read on for a full overview of the wholesale supply chain, from definitions of specific terms to a few unique challenges you’ll have to face as a new player in the field.

What is white-labeling?

White-labeling is, by necessity, a B2B or business to business endeavor, which means you’ll be selling primarily to other businesses. When you sell a white-labeled product, you produce a high-quality piece of merchandise, but sell it completely unbranded. The bottle, canister, or box is plain and waiting for another business to purchase it and sell it to customers under their brand umbrella. This contrasts with the sell-direct model, in which you produce, package, label, and then sell the product directly to your customers. Although many sellers might bristle at the idea of letting another company take the credit for their hard work, white-labeling can actually be incredibly profitable.

Benefits of white-labeling

White-labeling lets you utilize your talents without being bogged down by the realities of running a business. If you’re an expert baker, or technician, or cosmetic scientist, you’re no doubt incredible at crafting a high-quality product. However, this doesn’t necessarily translate into being an immediate success at other parts of ecommerce selling. Even though we at P2Pseller honestly believe that anyone can successfully run an ecommerce business, that doesn’t mean you have to. If that’s not what you want, or if you’re not interested in marketing, analytics, and customer service, producing white-label products can allow you to focus full-time on the manufacturing process while still netting a tidy profit.

The best of both worlds

Nervous about handling the fine and gritty parts of ecommerce selling, but still want to maintain control of your brand? 1P or 3P selling might be the best option for you. Both allow you to maintain brand-name recognition and sell through a large brand or marketplace. Let’s say you want to sell for Amazon or Walmart. You provide your already-labeled products, and they offer a certain customer base. The difference is as follows: under 1P selling, you essentially sell your products wholesale to the larger brand. In 3P selling, you sell through their marketplace, but generally have to handle your own fulfillment processes. This happy medium, so to speak, is becoming increasingly popular among merchants who don’t want to bother with doing everything themselves, but still want the option to build their own brand.

What is dropshipping?

The idea of dropshipping is fairly simple to wrap your head around. Unlike direct shipping, where products are dispatched by the company listing them for sale, dropshipping is a fulfillment method that works a bit differently. In this case, the company promoting, marketing, and selling the products never actually lays a hand on them. The seller doesn’t own the inventory at all. Instead, when you order from a marketplace that utilizes dropshipping, the company you buy from effectively acts as the middleman and puts your order through to a manufacturer, wholesaler, or secondary retailer who is then responsible for the fulfillment and shipping of the product to your door.

Aliexpress, Home Depot, and Taobao are all common sources for dropship stock which are then distributed through alternative sites. Although many people have a specific image of such retailers in mind, these days there are many examples of stores that utilize dropshipping. Historically, this tactic was used by mail-order companies like J.C. Penney’s and IKEA. Now, the e-commerce landscape is awash with dropshipping merchants, from small, independent Alibaba resellers who primarily market on Instagram or TikTok, to interior design e-commerce giant Wayfair. Most of all, though, Shopify is the platform of choice for today’s dropshipper. It even offers built-in apps that allow aspiring merchants to search for unique products on Alibaba which can then be uploaded and sold through the user’s own storefront.

What are some challenges an enterprising wholesaler or dropshipper will have to contend with?

Customer satisfaction is a huge one. For wholesalers, customers are all buying in bulk. This makes it significantly more unwieldy to ship in a reasonable time frame. This translates to trouble for dropshippers, who have their own customers anxiously and impatiently waiting for their ordered products. Wholesale retail adds another intermedial step that lengthens the amount of time the entire process takes from manufacture to delivery.

Aside from that, wholesaling businesses have to be cautious of overstocking. Yes, as many customers buy in bulk, it’s necessary to keep large quantities of inventory on hand. But if some sort of balance isn’t struck, matters can quickly spiral out of hand and lead to unnecessary waste in excess warehousing costs to house all this excess product.

Finally, even the largest and most efficient of businesses can be helpless in the face of a global shortage or supply chain disruption. These hiccups can’t always be forecasted even by the most advanced of algorithms or the most insightful of industry experts, meaning that businesses are better off developing multiple levels of failsafes and committing to a high level of supply chain resilience.

In conclusion

Whether you go for B2B vs B2C ecommerce warehousing is incredibly important to the efficiency of your operations. Most warehousing partners have the capability to accommodate both modes of operation as fundamentally fulfillment is the same. These fulfillment companies make sure you don’t have to spend valuable time picking and packing your own products from bins in your garage, which is a task which can quickly balloon to a size which takes up most of your waking day if you’re not careful. Once you grow large enough that doing your own fulfillment becomes cumbersome, it’s really best to seek out the assistance of a professional. Luckily, P2Pseller has your back. Register a free account with us today to browse our full catalog of transportation and warehousing partners without any commitment necessary on your part. We’re excited to have you on board to join the ecommerce revolution and take your company to the next level.


Tags

#wholesale#whitelabel#dropshipping#supplychain#supplychainmanagement
Previous Article
Demand forecasting and product procurement: a match made in heaven

Oleg Mikhailenko

Co-Founder, CEO P2Pseller

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