Utilizing the idea of “minimums” is a smart way to increase the overall value of your wholesale business.
For online e-commerce store owners especially, it can be tempting to just remove minimums, citing the classic “less overheads” as an excuse not to bother with this particular headache.
But while this might sound enticing, and at first it may get you more business, it will eventually lead to a less sustainable wholesale business.
I strongly believe that even online e-commerce wholesalers should have sensible minimums.
Minimums Are Good For Everyone
When it comes to setting ordering minimums and product minimums, you can and should be holding your wholesale customer accountable. That’s why they have the status of being a “wholesale” customer in the first place.
Not only is it good for the long term health of your wholesale relationship with that customer (in that they know what is expected of them), it’s also good for the health of your wholesale business.
It ensures that enough product is flowing out the door and that you aren’t dealing with small orders unnecessarily.
There are two types of minimum thresholds you can apply to a wholesale customer: Product Minimums and Order Minimums.
Type #1: Product Minimums
Product minimums are where you apply a minimum threshold to the ordering of a particular product or variations of that product.
There’s two primary reasons you would want to do this:
- To ensure that you sell enough of a product in one go
- To boost the sales volume on that product line
1. To Ensure You Sell Enough Of A Product In One Go
Wholesale is all about moving large amounts of product. It’s very much a numbers game because you’re often selling at upwards of 40% off retail margins.
Setting a product based minimum can ensure that you are selling enough of that particular product per order so that it’s worthwhile.
2. To Boost Sales Volume On That Product Line
The second reason to set a product minimum is to boost the sales volume of the product.
If you want to sell more of a product in the wholesale channel, you can make a small adjustment to the product minimum so that your wholesale customers order more by default when ordering that product.
Chances are they need the product anyway, so they’ll just continue to order at the new minimum.
Type #2: Order Minimums
The other type of minimum that you can apply to your wholesale customers is an order-based minimum.
This can take a couple of forms, either restricting the overall quantity that the wholesale customer is ordering (in Wholesale Suite we call this an order quantity minimum) or restricting the order subtotal (we call this an order subtotal minimum).
Both can be equally effective and if you really want you can use both together. Though I’d suggest to keep it simple.
There are two main reasons to give an order minimum to your wholesale customer:
- To boost the average order value (AOV)
- To ensure the wholesale customer is meeting their agreement
3. To Boost Average Order Value
Boosting the average order value is, as a store owner and marketer, something you should always have one eye on.
It’s cheaper to sell more to existing customers than to find brand new customers to sell to. The more you sell in one order to a wholesale customer, the more they will have ordered by the end of the quarter or the year.
In this way, you can boost your overall wholesale business.
You can set a minimum order amount based on an agreement or you can set it as a variable term that you adjust as you get a feel for how much your wholesale level customers typically order.
4. To Ensure Wholesale Customers Are Meeting Their Agreed Minimums
The other reason to look at setting order minimums is to ensure that your customers are doing what they said they were going to do.
It can be hard to get people to stick to a specific minimum over a term, but order minimums can help you get there without threatening.
If they want to order from you they need to make the minimum otherwise they don’t get wholesale pricing. It’s as simple as that.
By using sensible, but smart minimums on both the product level and the order level you can achieve your goals as a wholesale store owner and also keep your wholesale customers happy.
The last thing you want is to resort to threatening to take away their wholesale privileges, this isn’t good for business and they will vote with their wallet and order from someone else.
If you find yourself in that position, then setting product minimums and order minimums can help you smartly maneuver around this issue and get back to profitability.
WooCommerce is a great tool for building e-commerce stores and you can also use it to create a high-quality wholesale experience alongside your regular retail store as well. If you want to explore adding wholesale to your WooCommerce based store then you can use our free plugin WooCommerce Wholesale Prices to do so.
Many of our clients have moved their entire wholesale ordering operation into their online store using Wholesale Suite which pleases both the store owner and the wholesale customer.
And because you’re dealing with orders in a more sophisticated way, there’s also the happy side effect of being able to do everything you’ve read about in this article with ease.