When we talk about today’s ecommerce market, the first thing that comes to mind is oftentimes selling direct-to-consumer. I place an order online and it ships to my home.
But selling in bulk online is becoming a common ecommerce model. In fact, online sales on B2B ecommerce sites has increased 17.8% to $1.63 trillion in the past year.
Thanks to multichannel retailing solutions, many DTC brands also offer wholesale services for other businesses to generate more revenue and increase brand recognition.
In this article, we go in depth on what wholesale ecommerce is, how it works, and a comparison of some of the best wholesale ecommerce platforms to use.
What is wholesale ecommerce (and how does it work)?
Wholesale ecommerce is the process of selling products in bulk to another business, rather than selling them individually to the end customer.
When it comes to wholesale ecommerce, the process is carried out through online platforms, where the business places an order with you, the wholesaler, and you sell the goods at a discounted price to them.
In other words, you function as an intermediary between the retailer and the manufacturer. For retail ecommerce businesses, you would be buying the goods in bulk from the wholesaler.
This makes it much easier for ecommerce businesses to gain access to a wide variety of suppliers to compare prices and even diversify product offerings.
It also benefits manufacturers, in that they don’t have to worry about finding sellers who will distribute their products to end consumers.
7 benefits of B2B wholesale ecommerce
From selling through more units, to lower logistics costs from fewer individual shipments, there are a number of benefits to selling wholesale. DTC brands offer a B2B service for more exposure by partnering with other businesses to sell their products.
Here is an overview of the top benefits of B2B whole ecommerce.
1. Lower overall spending
In wholesale ecommerce, you get access to wholesale pricing. That means you can procure goods at a much lower rate than a retail ecommerce business.
It’s not uncommon for wholesalers to acquire products at over 100% cheaper rates than retail. That means you’re spending less per unit, which allows you to sell goods in bulk at a discounted rate to retailers because your overall cost is lower.
Moreover, since you’re shipping products in bulk instead of per unit, you can significantly lower your shipping and fulfillment costs. This further allows you to keep your spending low so you can sell goods at a competitive rate to your customers.
2. Higher spend per customer
Due to the lower prices and bulk purchases, wholesale ecommerce businesses can enjoy higher unit sales. This type of business typically involves long-term deals where a business purchases large quantities of products from you over time.
This means a higher average order value and inventory turnover rates for fewer B2B customers, unlike DTC ecommerce sales.
3. Improved scalability
Due to the many benefits of selling wholesale, your business can subsequently enjoy faster growth. Wholesale ecommerce has more room for scalability because the business model ensures increased sales and lower spending. It also means you can reorder more inventory, faster, helping to grow your business at a more rapid rate than relying solely on DTC orders.
4. Simplified buying process
Wholesale ecommerce can significantly simplify the buying process for your B2B customers, as they can conveniently compare prices and place their order online (as opposed to more traditional, manual channels like in person, phone, and mail-in orders).
This automation minimizes the hassle of negotiating with wholesalers and placing their orders over the phone or via email that can take longer. The simplified buying process enhances the B2B buyer experience, which paves the way for improved customer loyalty.
5. Ease of automation
The entire process of selling wholesale often involves a lot of moving parts, repetitive tasks, and lengthy paperwork. This can sometimes seem intimidating at first glance, especially for those new to the whole industry.
Wholesale ecommerce streamlines it for you by automating many of the manual processes and putting reorders on autopilot.
With wholesale ecommerce, B2B buyers can conveniently place their orders on their own without you having to be personally involved. Additionally, orders are automatically recorded and then processed, which minimizes the need for manual records and physical paperwork.
This means you’ll spend less time personally managing your orders, leaving you free to focus on more strategic aspects of your business (such as forming more retail partnerships).
6. Ease of entering into new markets
Expanding into a new region or country can be extremely challenging for any business as it comes with multiple logistical and marketing considerations.
Selling wholesale to an established retailer makes it easier for you to enter into new markets (even regionally), as you may be able to leverage their influence, distribution network, and existing customer base. Of course, there can be different regulations in other countries, but building on these connections can make things easier.
7. Get predictable margin of profit
For B2B wholesale businesses, you’re typically selling to semi-regular customers on a long-term basis (sometimes, with contracts). This makes it somewhat easier to predict your margin of profit for each month, quarter, or year (as compared to ecommerce consumers, who you hope to convert into repeat customers but there is no guarantee.
This helps to accurately project your revenue ahead of time, which can be highly beneficial for budgeting and financial planning efforts.
How to get wholesale goods as an ecommerce business
To qualify for wholesale goods as an ecommerce business, you must have a license to buy wholesale. The name of the license may vary by state (and country by country). While some may call it a wholesale ID, others may call it a reseller’s permit or a reseller’s license.
This license is necessary for all wholesale purchases meant for resale and not for personal consumption.
A wholesale license serves as proof that you’re a lawful dealer of wholesale goods. It helps manufacturers know who they’re selling to and retailers know who they’re buying from, so you can become a known entity in the wholesale ecommerce industry.
Additionally, a wholesale license may also be essential to reduce and sometimes even eliminate sales tax.
In some governments, the expense of a wholesale license is considered as an alternative to sales tax, meaning you won’t have to worry about per-unit taxes. This can significantly bring down your tax payments as the per-unit taxes can quickly add up for bulk purchases.
Once you have this license, you can browse through wholesale marketplaces to find manufacturers for the products you want to sell.
4 best wholesale ecommerce platforms
If you’re just getting started with wholesale ecommerce, you’ll need to look for the right platforms to help you set things up. Here are the best wholesale ecommerce platforms that you should consider for your business.
Alibaba is often the first thing that comes to mind when we think of wholesale. As one of the leading wholesale marketplaces, most novices in the industry start out here.
This is a China-based marketplace, where you can gain access to a wide variety of products from suppliers. Wholesalers can also list their products on the website and sell them to retailers around the world.
A major benefit of using this platform is you can leverage the existing customer base, instead of having to build your own from scratch. That means you can easily sell to your B2B customers without having to invest in your own website.
But keep in mind that since there are many other wholesalers selling the same products as you, you have to prepare for tough competition.
2. Shopify Plus
If you want to be a successful brand online, eventually you will need a wholesale website to grow your business. One common ecommerce platform is Shopify Plus, which offers solutions for wholesale businesses.
Shopify Plus allows you to quickly set up custom pages tailored to your brand and audience. It also lets you set volume-based pricing and discounts — a must-have feature for wholesale ecommerce businesses that sell finished goods in bulk.
Shopify is one of the leading ecommerce platforms used by major direct-to-consumer (DTC) and wholesale businesses. For example, ShipBob customer Touchland has a huge DTC following but also a wholesale inquiry form to sell their wholesale products online.
As a leading ecommerce platform, BigCommerce comes with powerful features to support your wholesale business. It comes with built-in wholesale functionality with simplified front and back-end management.
BigCommerce makes it easy to customize the site experience of your wholesale customers by assigning them to unique customer groups. This will allow them to enjoy unique pricing and reordering processes.
WooCommerce is a highly customizable open-source platform for ecommerce businesses. You can install the plugin to your WordPress site, and instantly finish setting up your wholesale ecommerce store.
With WooCommerce, you can customize the features and functionality of your ecommerce store by adding the extensions you need. However, there is much less out-of-the-box functionality, meaning it can require a lot of developer work to build a wholesale ecommerce site.
How to become a B2B wholesale supplier
If you’ve decided that becoming a B2B wholesale supplier is the right move for you, there are several steps that you need to take. Here’s an overview of the typical path to becoming a wholesale distributor for ecommerce businesses.
Research the market
Although wholesale ecommerce offers a number of perks, the market can be extremely competitive. Keep in mind that you’ll be competing with countless other businesses, many of whom will have a well-established customer base.
It’s important to start out by vigorously researching the market. This will help you identify any opportunities and weaknesses that you can capitalize on.
For example, are there any categories that are under-supplied? Or are existing wholesalers failing to meet a specific need of B2B customers? Use your research to look for the ideal audience to target so you can gain traction from the start.
Decide on a niche
When you’re just starting out, it’s important to focus your efforts and resources on product categories that are profitable and don’t require significant investment.
So instead of trying to sell anything and everything to everyone, focus on establishing your business in a chosen niche. This minimizes the risk of spending all your money on items that won’t sell too well or on items with low profit margins.
Moreover, settling on a niche makes it easier to find reliable manufacturers and build your relationship with them. Similarly, it’s easier to build your credibility and form a long-term partnership with B2B buyers in your chosen niche.
Create a distribution and fulfillment plan
Another crucial step is deciding how to distribute the goods and fulfill orders to your B2B customers. Many ecommerce wholesalers distribute their products through wholesale marketplaces like Alibaba.
Additionally, they may have a dedicated website through which B2C ecommerce businesses and retail stores can purchase the products.
At the start, you will likely need to do some outreach to win over your initial customers before the magically come knocking at your door (or DMs). This may involve directly reaching out to retail stores and ecommerce websites with your offer (and explaining why your product is different, or the value it brings). Make sure all of this is planned out before you start selling wholesale.
Additionally, you’ll have to consider your wholesale fulfillment strategy.
- Will you store the goods in your own warehouse(s)?
- How will you ship the goods to your B2B customers?
- Will it be better to partner with an omnifulfillment partner like ShipBob that can handle the entire wholesale fulfillment process for you?
Make sure to decide on everything beforehand, so you can seamlessly start your wholesale ecommerce business.
“Direct-to-consumer makes up the vast majority of our orders at this point, but ShipBob also helps with our B2B needs. We offer products through Whole Foods in the Northeast and are looking to expand our wholesale channels.”
Michael Peters, VP of E-Commerce Operations at TB12
Obtain necessary licenses
Be sure to acquire the appropriate wholesale licenses and permits you need to buy and sell goods wholesale early on. Generally, you’ll need a reseller’s permit to show manufacturers and buyers alike that you’re a legit wholesale business, as there are legalities.
The permit requirements may vary by state and country, so make sure to check the specifics on the tax or revenue website of your municipality and consult your lawyer and/or accountant.
An employer identification number (EIN) is also needed if you’re planning to hire employees for your wholesale business. Additionally, a sales license is necessary to get a legal permit to resell the goods that you procured.
And don’t forget your sales tax ID so you can collect and pay the appropriate taxes, and maintain a proper record of your tax payment.
For products that have stiff competition or involve intellectual property, you’d also need to have a licensing agreement. This helps suppliers control the amount and type of goods sold as well as the market it is sold in.
Settle on your supply chain partners
One of the most crucial steps involves looking for reliable companies to partner with for your wholesale ecommerce business. This step determines the profitability and sustainability of your business in the long run.
For starters, you’ll want to partner with manufacturers that not only sell the products you want, but also have a strong reputation in the industry. They should be able to offer decent wholesale pricing so you can make a good profit even if you sell the goods at a discounted rate.
Additionally, think about partners who can help with other aspects of your ecommerce supply chain. For instance, if you plan on outsourcing fulfillment, you’ll need to look for a reputable partner who has the capacity and resources to handle wholesale fulfillment.
“We want to continue to become a more multichannel brand and work with bigger retailers. We’ve done some B2B orders with ShipBob, including Urban Outfitters, and now we’re in talks with some larger wholesale accounts. We’re also testing subscription box partnerships.”
Manuel de la Cruz, CEO at Boie
Develop a pricing strategy
Your pricing strategy is another important factor that determines the overall profitability of your wholesale business. This can be the trickiest part because you need to sell the goods at a price that’s cheap enough to appeal to wholesale buyers but still guarantees a solid margin of profit.
Additionally, if you’re selling both retail and wholesale, you need to make sure the wholesale pricing isn’t too low that retail stores can undercut your retail rates.
It’s not uncommon for wholesale businesses to sell goods at double the price of procurement. Setting a minimum order quantity is a great way to ensure that you’re seeing a higher average order value.
Set up your wholesale ecommerce website
While it’s much easier to leverage the existing customer base on a wholesale marketplace, you won’t have much room for growth. It’s almost impossible to build a strong brand name and establish yourself as a reputable wholesale business when you’re only selling through marketplaces.
So if you ever plan on scaling your wholesale ecommerce business and building a name for yourself, a standalone website is a must-have. Having your own website not only makes you come across as a credible wholesale business, but it also simplifies the experience for everyone involved.
You can use your website to display all the necessary information about your wholesale goods such as wholesale pricing, minimum order quantity, and estimated delivery timeframes.
Since all the information is readily available, your B2B buyers can easily place their orders at their own convenience without having to pick up the phone or send an email. This process saves you time answering customer questions and taking orders over the phone or email.
And you won’t have to manually record the orders on paper and fax purchase orders to the relevant parties. Orders are automatically recorded and processed, which reduces the manual work for you and streamlines the entire wholesale ecommerce process for you.
How ShipBob helps streamline operations for wholesale ecommerce businesses
Setting up a wholesale ecommerce business comes with its own set of challenges. Especially with businesses dealing with higher order volumes, the regular ecommerce challenges become maximized not only in terms of cost but also in terms of logistics.
And order fulfillment is one of those challenges that you have to overcome as a wholesale ecommerce business.
Fortunately, ShipBob simplifies B2B fulfillment for you, so you can streamline your wholesale ecommerce operations. You can leverage the B2B fulfillment service to outsource your entire wholesale fulfillment process to the experts.
This way, you won’t have to invest in your own fulfillment team, which can be a major financial and logistical headache. And you won’t need to worry about the logistics of getting wholesale orders delivered on time to your customers.
ShipBob also offers a B2B fulfillment suite with EDI capabilities. This allows you to easily create B2B wholesale orders and ship them to your retail partners from a single dashboard.
From here, you can leave ShipBob in charge of fulfilling EDI-compliant wholesale and other B2B orders for your retail partners.
The ShipBob dashboard will automatically pull in data from your purchase orders to process new orders and create packing slips. This minimizes the need for manual work and physical paperwork to significantly streamline your wholesale ecommerce operations.
“ShipBob’s ability to service both D2C and B2B has enabled us to build more consistent procedures and practices across our different sales channels.
Along with Chewy, we’re also fulfilling orders through Amazon, as they are the two biggest online pet sales channels in the US.
We utilize ShipBob’s EDI solution that is connected to our 3rd party EDI platform SPS Commerce for our Chewy orders, and when we don’t ship directly to Amazon, we rely on ShipBob’s direct integration with Amazon for FBA orders.
We’re even exploring additional channels that ShipBob supports, such as Walmart.com.
Being an omnichannel brand is critical for us, so we can reach more pet lovers from more places. We’re glad that ShipBob helps us keep up with demand from all the places we reach our customers.”
– Stephanie Lee, COO at PetLab Co.
As you enter into new channels, ShipBob can help you manage both B2B and B2C orders and provide full visibility into the fulfillment process all from one dashboard. Request a fulfillment quote below.
Wholesale ecommerce FAQs
Here are answers to the top questions about wholesale ecommerce.
What is the difference between retail and wholesale?
While retail involves a business selling directly to the end consumer, wholesale involves a business selling goods in bulk at a discount to another business.
How do I start an ecommerce wholesale business?
You can start an ecommerce wholesale business by acquiring the necessary licenses and permits, establishing a wholesale ecommerce website, and finding reliable supply chain partners such as manufacturers, suppliers, retail stores, and fulfillment companies.
Can ShipBob help with my wholesale business?
Yes! ShipBob can help you with your wholesale business by taking care of the entire B2B fulfillment process for you. You can easily place wholesale orders and get ShipBob to fulfill them to your retail partners. ShipBob can fulfill wholesale orders to major retailers like Target, Macy’s, Neiman Marcus, and dozens more.
Moreover, a distributed fulfillment network makes your wholesale fulfillment process more efficient and easy to budget for.