What Are the Positives and Negatives of Buying Wholesale Merchandise?

Significant savings, quantity of stock and instant availability are three of the positives of buying wholesale merchandise. Buying a high volume of stock is certain to offer one of the most attractive options for saving money. However, it is crucial to have enough start-up capital to be able to invest in the desired stock. A further potential downside can relate to providing a large storage area to secure the stock until the orders start to arrive. Most of the negative issues are likely to impact the individuals or small businesses and not the large companies that have access to enough cash flow and warehouses for storage.

A major positive of investing in the wholesale merchandise is the potential savings possible for buying supplies in bulk. Many of wholesalers and distributors increase the discounts and rates for the greater volume orders. A wholesaler is in a position to offer the discounted prices on the bulk ordered merchandise since this means less change of expired or spoiled goods, less packaging materials and less handling. Both the consumer and business is able to benefit with such purchasing arrangements. By buying low-cost at the wholesaler, a store is in a position to offer the more competitive prices to the end consumer.

It can also benefit the business or retailer to buy the goods at the most appropriate and affordable times. For instance, a retailer may invest in a range of clothing when it is out of season and available at the most attractive prices. By buying the flip-flops or summer dresses in winter, it is possible to store them until the summer for the highest profit margins.

A common negative of buying in bulk is difficulty in providing enough storage space. A significant issue relates to the food retailer that buys in bulk and needs refrigeration or freezer space. The same could apply to all-types of retailers who do not have enough space on the premises to store the latest supplies. Also, it is crucial to consider certain goods come with an end date. This may apply with clothes, since many items are seasonal and go out of style. It helps to consider these issues when buying in bulk since it can increase the chances of being left with stock that you aren’t able to sell on.

A further negative issue can relate to new business with limited cash flow. This is certain to restrict the ability to invest in a high volume of wholesale items. A retailer or individual is certain to be in a position of not being able to make as much profit on each item sold when it isn’t possible to get the best discounts.

Post time: 04-13-2017