Small businesses are often eaten out by large companies unless they know how to work around strategies to secure inventory. This is why creativity is key to make a boutique or small investment work.
Otherwise, multiple issues start around inventory, costs, and efficiency. People end up spending more and going bankrupt before being able to flourish in their industry.
One of the most effective ways to do this is to partner with wholesale distributors. Whether you are a startup bakery or a growing retailer, the right wholesale relationship can make the difference.
They unlock better pricing, terms, and conditions. All of it offering flexibility in costs and how you can even pay less and not even at once.
At Coastal Surplus Solutions, our team understands the importance of wholesaling, bulk purchasing, and partnerships.
We are here to make sure you can connect to the items, starting by helping you build successful small business wholesale partnerships regardless of your industry.
Step 1: Start with Consignment Agreements
Consignment agreements are way better than upfront inventory investment. The latter does not offer much when it comes to capital and how the money is handled.
Meanwhile, agreements are a smart way to reduce risk and test new products. All of it without a large cash outlay in place or to worry about.
This works in a way that the distributor provides goods to your business. You only pay for what you sell and any unsold items can often be returned or rotated.
This helps you avoid any risk in excess stock, having to get rid of extra pieces, or having to deal with retained capital.
It is all an advantage to lower upfront investment, bring less risk, and working on new products when unsure if they will sell or not.
This is an amazing option for new businesses, bakeries, or startups. The key is building trust with wholesale distributors for startups without over-committing capital, as started by Printivity Insights.
Step 2: Negotiate “Pay-as-You-Sell” Terms
Building the relationship will be the toughest part.
However, to negotiate wholesale terms for startups or any business requires care and working around a proper business model.
“Pay-as-you-sell” is a flexible option, but not many work with the system.
Distributors like to guarantee their payments and side of the investment. However, the rolling payment option works more around keeping items and, as you sell them, you pay the distributor.
Another option is working on paying the distributor at regular intervals. This includes every 15 days or monthly. It all depends on the deal.
The system benefit is how it improves cash flow, offers less pressure to move large quantities quickly, and the ability to scale orders with demand.
As you sell more, you cover more. But the benefit of just paying what you sell remains there.
The key aspect of this is how you can negotiate the minimum order quantity. It is usually low for startups, but you can work on different options.
According to research performed by Shopify, many distributors are open to flexible MOQs, making it more doable on your end.
Example: Tampa Bakery Partners with Local Flour Supplier
A Tampa bakery is proof of how you can benefit when working in your relationships.
The bakery went over new product lines and wanted to find a way to avoid tieing up cash in large flour orders.
This is a massive investment and while bakeries always need flour, it requires a lot of work and production to get rid of the one for new product lines.
By partnering with a local distributor on a consignment basis and negotiating the pay-as-you-sell terms, the bakery achieved what they needed:
- They got the flour and materials needed to test new recipes and products. All of it with minimal risk.
- They only pay the flour they used, not more than that. This provided reduced waste and improved their cash flow.
- As they worked through tests, they scaled their orders and demand, but without being fully tied to the process.
The whole process allowed the bakery to grow its menu, delight customers, and save resources. In the short- and long-term, they invested with what they could, but got all the benefits without much upfront investment.
How to Build Strong Wholesale Partnerships
The whole idea through this all is having your relationships built.
Without them, there is no point in trying the entire process of wholesale distributors.
At Coastal Surplus Solutions, our professionals can provide recommendations and tips to connect with distributors.
- Start small by looking for distributors that already offer these terms. It can be a whole place and as small as the distributor is, it could be worth the entire process, depending on the terms.
- Leverage local and niche suppliers. You want to find those near you to reduce costs and shipping delays.
- Negotiate incentives and always go for first-time discounts, seasonal options, and much more.
- Be regular and transparent with communication. You want to keep your distributor informed and on the loop.
Feel free to call or email us to get more information, and connect with wholesale distributors. We are professional sourcing partners who help through the whole process and provide expertise and assistance.
