The Pros and Cons of Offering Wholesale Pricing

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The pros and cons of offering wholesale pricing

Wholesale pricing is a popular eCommerce strategy that involves selling products at a bulk discount to retailers and other merchants that will resell your items.

Selling wholesale is an attractive option for Shopify store owners who want to increase sales, expand their customer reach, and build brand loyalty.

Why offer wholesale?

Wholesale is an attractive option for store owners who want to sell more of their products without investing additional capital on marketing. Another advantage to growing your business and increasing brand awareness by offering a wholesale option is getting your product into more stores or online marketplaces.

Wholesale pricing is the term used to describe the sale of products or services at a discounted rate. Wholesale pricing can be an incredibly effective strategy to use on your Shopify store, but some cons need to be considered as well. If you’re considering offering wholesale pricing, it’s important to weigh the pros and cons so you can make the best possible decision for your store. It can be a great way to increase sales and build a long-term customer base. But there are some challenges in offering wholesale pricing that you have to address before going forward.

Let’s explore the pros and cons of offering wholesale pricing on your Shopify store.

The Pros of Offering Wholesale Pricing

Wholesale pricing is an important consideration for your Shopify store. Offering wholesale pricing can help you sell more products, boost revenue, and grow your business.

Five main advantages of offering wholesale pricing to a wider audience

  1. You’ll sell more products. If you’re selling products at a wholesale price, then the price will be lower than the cost of the product when bought individually. This makes it easier for retailers to buy them in larger quantities, increasing how much they buy.
  1. You’ll make more money on each sale. If a business is buying in bulk, they’re getting a discount on what they’re buying. This means that you’ll be able to earn back the cost of making or purchasing the product faster than if someone bought it individually at the original price. You’ll also be able to make more profit per sale as well when you’re selling it at a wholesale price point that’s above what you paid for the product originally.
  1. You’ll build long-lasting relationships with your customers. Wholesaling also helps you reach more customers and expand your market share. It’s not just larger retailers that benefit from wholesale pricing. Smaller e-commerce stores can benefit as well. It’s also possible that these types of stores will not be able to afford high retail prices so they will be attracted by reduced wholesale prices.
  1. As a Shopify store owner, any way to reduce the costs of production is going to give you a significant advantage over the competition. And offering wholesale pricing is one of the most powerful ways to offset your costs and pass those savings on to end-consumers inside your Shopify store. You get cheaper products, which means you can spend less money on buying your inventory and make more profits overall. This allows you to scale your business faster and become the market leader. The more you buy, the bigger the discount. If you have a large number of customers, this will help you scale quickly since your costs are lower.
  1. In most cases, it is more environmentally friendly to sell wholesale, and often the only way to make your sales price competitive with other wholesale sellers. Wholesale prices often do not include shipping costs as they are generally calculated into the price of the product. In this scenario, you can charge a lower cost + ship at a volume discounted rate. Ultimately, when you’re shipping to the same wholesaler in bulk to the same location, you’re reducing the carbon footprint of shipping on the last mile delivery.

With wholesale pricing, you may have to sell a large number of goods at a lower price, but you can expect to make up for the discount in volume. As you increase your sales volume, you can increase the prices you charge and still stay competitive. This can help your business grow more quickly because it becomes easier to meet your sales goals.

Pros and cons of offering wholesale pricing

So what’s the catch? Is there a downside? Let’s take a look at some of the disadvantages of offering wholesale pricing along with what it takes to get started.

The Cons of Wholesale Pricing

  1. If you offer branded items, you may be constrained by price point guidelines established by the brand. They might not want you to price your items cheaper than they would, or to give discounts or offers that would reduce their income.
  1. Because the price is decreased, your profit margin is reduced when you provide wholesale prices. To make up for the shortfall, you’ll need to increase your sales volume. However, if you’re selling branded things with a solid market reputation, it can be worth it because such brands are more likely to be resold at full retail price.

For example, most products have markups of 50-100 percent. This is the price that a buyer pays to get your item from you to the end consumer, who will use the product. The problem is that this markup is usually applied when selling the product at wholesale prices. As a result, buyers often buy fewer items than they should so they can avoid paying retail prices. That’s why you can’t just give buyers wholesale pricing and expect them to buy more of your product. What’s worse, this means that you are leaving money on the table by not selling more items.

There are various solutions available for businesses that already have a direct-to-consumer store but wish to develop a wholesale channel for retail stores to buy from. One way would be to create a second Shopify store with a different URL which is a pain point for many store owners because it is more expensive to do so.

Another option for setting up a wholesale channel on your Shopify business is to use a Shopify app like Wholesale Pricing Now. Wholesale Pricing now has features to help with this such as a Wholesale Order Form that enables buyers to buy in bulk, add multiple items in a cart on a single page, apply wholesale discounts without having to create an entirely different store, more convenience, less hassle and more efficient.

Conclusion

It’s easy to see why offering wholesale pricing can be appealing. There is a lot to consider before adding this option to your store. Consider your options before jumping right in headfirst. And if you are looking for a seamless option without having to add a separate Shopify store, Wholesale Pricing Now makes it easy out of the box. With Wholesale Pricing Now, you can stay in a single store and create wholesale pricing to gate who sees your products at special prices. Offer wholesale pricing, custom pricing, tiered pricing, VIP pricing & volume discounts to your wholesale customers and friends & family VIP customers without creating a separate store.

Start your 14-day free trial now!

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