Supply chain structure is complex and only the ones who are wise enough understand how to mold it to get optimum benefits out of it. So, are you a wholesaler and at the same time wise enough to understand that moving forward in the supply chain is a very beneficial decision for you? If not, you should understand the structure of supply chain first!

Supply chain involves various parties like UK Manufacturers , wholesalers, retailers and end customers. This is the sequence in which the products pass from one hand to another before reaching the final consumer. As a wholesaler, moving forward in the supply chain means you become your own retailer by opening a retail outlet. This means now your customers would not be retail businesses but you will be selling to the end consumers directly. Let’s discuss how it is a wise decision on the part of UK Wholesalers.

Eliminates middleman commission:
When you sell to the end customers directly, you sell at retail price, not on wholesale price. This means that you have eliminated retailer’s commission and it will now add to your profit and will give it a boost. Also, if you still want to sell at low prices, you can sell at below retail price and can pass on your discounts to the end customers easily.

Eliminates competition:
When you become your own distributor, you become a big giant and start enjoying a monopolistic position in the market. Other retailers and wholesalers entering in the market will not be a threat to you because of your scale of operation. If they sell at low prices, you can sell at a price which is even lower than theirs. This is because you are a wholesaler as well as a retailer and to stand against such minor competitors is a piece of cake for you.

Reduction in transaction costs:
Common ownership of a Wholesale as well as retail outlet results in closer proximity which saves your transportation cost. Delivery cost of goods to your own retail outlet is easy and less costly as compared to delivering to other retailers. Also, control cost and negotiation cost is also saved that result in an overall reduction of transaction cost.

No need to hold inventory:
If you are only a wholesaler, your goods remain in the warehouse until they are picked by the retailers. This results in extra burden of storage cost which can be eliminated if you have your own retail outlet. The goods you are directly displayed on your retail outlet and your inventory holding cost is saved.

No tension of credit payments:
Retailers often buy on credit and you have to wait for the cash to make payments to your manufacturers or suppliers. Also, sometimes you are afraid of your credit conversion into bad debts. This results in inefficiency in supply chain. On the other hand, if you are your own retailer, you don’t need to bother about the credit payments.

So if you are a wholesaler, opening a retail outlet can be a very wise decision for you. Not only is it beneficial for your but it also speeds up the entire supply chain cycle.

Author's Bio: 

William King is the director of Wholesale, UK Manufacturers, Distributors and UK Wholesalers. He has 18 years of experience in the marketing and trading industries and has been helping retailers and startups with their product sourcing, promotion, marketing and supply chain requirements.