If you’ve been running an e-commerce store for a while and are looking at wholesale as a way to increase your revenue then the temptation is to just bolt-on wholesale sales, recruit a few customers to buy in bulk and be done with it.
But wholesaling is a completely different beast to retailing. There’s many aspects of a wholesale customer’s behaviour that is different from a retail customer.
If you understand a few of them then you’ll be better positioned to increase your wholesale sales than if you are marketing to them in the same manner as your retail customers.
Today we’re going to be covering 10 different behaviours between wholesale and retail customers.
1. Sales discount strategies aren’t as effective on wholesale customers
One of the core marketing strategies many stores use these days to attract retail customers is to run almost perpetual sales and discounts.
Unfortunately, this doesn’t garner as much attention for wholesale customers. Even if they are motivated more by permanent bulk discounts and other non-sale related tactics like invoice payment over instant payment.
2. Wholesale customers are driven by their customers
A wholesale customer’s ordering patterns are mostly driven by what their customers are buying.
A retail customer’s ordering can be swayed by marketing and sales tactics.
3. Accounts vs upfront payment
A major attraction for wholesale customers is the ability to pay via invoice.
A retail customer is forced to pay via credit card, cash or other upfront payment option such as PayPal.
The ability to offer a 30, 60 or 90 day term on invoice rather than paying upfront will attract many wholesale customers because they can then purchase stock with no money down and have 30-90 days or more to sell it to their customers in order to pay their bill.
4. Repeat orders are easier to encourage with wholesale customers
With the exception of a recurring sales model such as a subscription based business, wholesale customers are much easier to encourage to repeat order.
There are many strategies you can use to encourage repeat orders and increase the overall frequency of their ordering.
5. Wholesale customers need more support
Overall, wholesale customers will need more support than your retail customers.
This is coming from the point of view of sales support, sales literature, physical product displays (which are often given away to stores), ordering sheets, FAQs, order management, and more.
Retail orders, once fulfilled, will rarely require further intervention unless there’s something wrong with the product.
6. Margins are usually tighter, so terms of sale make a big difference
Everyone along the fulfillment chain needs to make their money. So the margin on wholesale orders is usually much less than retail orders.
What makes up for it is the bulk nature of wholesale orders where you can afford to give a price break in order to receive much larger orders.
That’s why the terms of sale (minimum order subtotals, quantity amounts, etc) tend to play a big part in arrangements with wholesale customers.
7. Wholesale customers have customers to please
We touched on this lightly before; by nature of the business, wholesale customers have their own customers to please and thus are more driven by their customer’s needs than your need to shift certain product.
Sales encouraging them to order certain products rarely make a huge difference to their ordering preferences.
What you can do as an alternative strategy is to help them sell more of certain products by providing better front-end sales support.
8. Retail customers are choosy, wholesale customers are not
Part of being a retail customer is the ability to pick and choose. In a retail store setting, someone might choose not to buy an item based on something trivial. It may be because of the look of it or if it has a mark they don’t like. This is because they’re buying one’s and two’s of items.
A wholesale customer when they order will be doing so based on large quantities. They don’t necessarily get to choose what they have to order. This is because their opinion doesn’t really come into the equation.
9. Wholesale customers are easily divided into tiers
Retail customers are hard to separate into groups beyond marketing segments.
Wholesale customers, on the other hand, can be easily divided into tiers based on their ordering behaviour.
Shop owners often do this based on the amount their wholesale customer is ordering. They will also sign them up to a minimum ordering volume with a tiered rate of pricing.
10. Attracted to different aspects of an offer
Finally, retail customers are more attracted to the appearance of an offer. It might be the look of an item, what kind of discount they can get or the reputation of a brand.
Wholesale customers are more attracted to the terms of the offer such as their minimum ordering requirements, the price breaks for wholesale ordering and how long they have to pay (invoice terms).
More Differences
While these aren’t hard and fast rules, they’re a good guideline and will help you tailor your marketing strategy to these very different customer groups. There are, of course, many other differences but this list was designed to get you thinking about how to approach them differently.
Selling to both wholesale and retail can be a potent mix when you get the marketing, sales terms and distribution right. Understanding the differences between them is imperative to making this dual channel business model work.
