10 Biggest Challenges of the Wholesale Business and Their Solutions

Brand new technologies, the growth of e-commerce, omnichannel sales, and marketing trends—the landscape of wholesale selling is changing rapidly. And if they don’t adjust to these developments, wholesalers can find themselves in a tight spot.

New challenges are also great opportunities for wholesalers to develop innovative ways to grow their business and increase sales as they ride the wave of market trends.

Whether you’re starting a wholesale business or are struggling to keep one afloat, you’ve come to the right place.

Read on as we list some common issues plaguing the wholesale industry and ways to overcome them.

1. Inventory Management

Robust, efficient inventory management is crucial because overstocks and shortages are uneconomical for wholesale businesses.

And the best way to stay on top of inventory-related issues is by managing your inventory better and ensuring accuracy and transparency from the moment the items are delivered.

Inventory management software and tools can help you track inventory levels, individual items, their condition, turnover ratio, and more. These tools also integrate with other operational systems to gain insight into industry trends, restocking needs, and changes in demand.

These tools are also crucial for tracking reorder levels, fast or slow-moving goods, obsolete goods, and predicting minimum order quantities to stay on top of consumer demand.

Businesses can also optimize their pick, pack, and ship process to ensure smooth and fast delivery of customer orders.

2. Shrinking Profit Margins and Profitability

Wholesalers are struggling to stay competitive in the industry while generating consistent profits. This is due mainly to the nature of wholesale business, new market players, and the introduction of new technologies.

Forecasting tools can prove helpful in solving this problem. They help wholesalers predict spikes and dips in demand and are great for planning and allocating stock effectively based on holidays, weather conditions, emerging trends, and more.

Inventory management systems also enable wholesalers to track the hidden inventory costs of carrying a single product. With in-depth data analytics, business owners can understand what products are generating higher profits and which generate high demand from their target audiences. With this information, they can stock up on the most profitable goods that fly off the shelves.

Wholesalers can also try to differentiate their brands by offering high-value services at highly competitive prices. Top-notch customer service is often taken for granted in the industry, but gaining loyalty from clients is crucial for long-term success.

3. Disintermediation

Disintermediation is when manufacturers try to sell their goods directly to retailers while cutting out the intermediary. New technologies are making this much more manageable.

At such times, wholesalers can solidify their position in the supply chain by offering retailers value-added services that manufacturers simply can’t.

Some of these include:

• Selling refurbished electronics for wholesale
• Working as a drop shipping partner for manufacturers
• Automating distribution using vendor-managed inventory tools (VMI)
• Gathering actionable insight and offering them to manufacturers

4. Ecommerce Growth

Navigating eCommerce is another issue in the wholesale industry. Unfortunately, most business owners lack the knowledge or resources to implement online sales into their operations.

The solution?

• Building a digital sales channel
• Establishing an online presence
• Using omnichannel marketing
• Working with B2B marketplaces

5. Demand for B2C-Type Customer Service

Once upon a time, value-added services were not a concern for wholesale sales and marketing strategies. But now they are.

Retail clients want more visibility into the fulfillment procedures and are looking for wholesalers that can provide it. 

Some of the most in-demand value additions include:

• 24/7 customer service
• Chatbots
• Testimonials
• Loyalty-based offers and discounts
• Dedicated customer support

6. Retailer Demands Fast and Top-Quality Delivery

The demand for faster deliveries is high from retailers tightening their fulfillment timelines and imposing stiff penalties for late shipments. This creates a bottleneck situation for wholesalers.

Some of the solutions wholesalers can try include:

• Implementing inventory management systems to stay on top of stock levels and meet all delivery deadlines with no issue
• Keeping track of priority vendors based on lead times, product quality, cost of goods, etc., to match fluctuating demands
• Partnering with manufacturers for direct shipping
• Opening multiple warehouses
• Working with third-party logistics (3PLs)

7. Disruptions in Global Supply Chain

The pandemic left the global supply chain in disarray. These disruptions include shortages of goods, inflation, shipping delays, labor shortages, demand peaks, etc.

Although the problem is too big for wholesalers to tackle, managing its effects on the business is possible. With strategies for risk mobilization, supply chain visibility, simulations for end-to-end scenarios, and more, they can build resilience despite these emerging issues. 

8. Manual Processes

Despite the rise of automation solutions across all other industries, wholesale businesses have been slow to adopt these changes into their operations.

Manual processes still make up most of the operations in wholesale. With increasing competition and demand to offer fast and efficient services, manual processes are no longer enough.

Manual processes are also more prone to errors and delays.

Some tasks wholesalers can automate include:

• Accounts receivable
• Shipping
• Business metrics and reporting
• Website order management

9. Quality Control

Wholesalers also face pressure to deliver top-quality products and take responsibility for shipping errors. These losses are huge in a market already facing shrinking profit margins.

Some of the ways to ensure the optimum condition of your goods include:

• Reducing the need for manual processing of warehouse items
• Creating structured workflows
• Providing employee training
• Recording vendor accuracy
• Improving stock rotation

Thankfully, most of these solutions are easily implemented with inventory management software.

10. Worker Safety

Worker safety was already a major concern in the wholesale industry, and the pandemic only exacerbated the problem. Loss of labor can result in lower productivity and, ultimately, lost profits.

The solution for this is rather simple. Wholesalers can start by introducing practices to ensure worker safety is prioritized. From storage to transportation, emphasize making procedures safe for all workers.

The Bottom Line

Running a wholesale business can prove more difficult in practice than in concept. Learning and preparing for upcoming challenges can help you find the necessary solutions, giving you more control over your business in an ever-changing market.

Use this guide to anticipate and prepare for challenges before they come your way and turn obstacles into opportunities for growth.

Good luck!