Do you have products that need to be distributed to the market? You may want to tap into the wholesaler. But before you do that, read on to find out the advantages and disadvantages of using a wholesaler.

Wholesale business means holding a large volume of stocks mainly for small retailers. The advantage to the retailer of dealing with a wholesaler rather than the manufacturer is that large chunks of working capital do not have to be tied up in stocks.

Conversely, the manufacturers prefer to deal with wholesalers instead of small retailers because they are in a position to make bulk purchases. This reduces administration and physical distribution problems and thus cost for the manufacturer.

As a new small business it is unlikely that you will be able to convince a wholesaler to buy in large quantities of your untried product. However, the chief advantage of dealing with a wholesaler is that the cost involved in marketing the product direct to the consumer are taken over by the wholesaler.

Obviously, your profit margin will be reduced but this should be offset by the increases in sales volume and decrease in overheads of using this method.

The main problem with this form of distribution is that you can lose control over the way the product is marketed to the consumer. As the level of demand set by the consumer will ultimately affect your sales, bad distribution by the wholesaler and poor selling practices by the retailers he sells to can have disastrous effects on your business. The same is, of course, partly true if you intend to set up as a wholesaler yourself.

You can, of course, bypass the wholesaler and sell direct to retailers. You will encounter some of the problems associated with selling to wholesalers but have the advantage of vetting each retailer in turn. To encourage retailers to give selling space to your products, you might consider offering them return term.

Give retailers a choice to return your products if they can't make the sale. Helping them to reduce their risk, can encourage them to hold our products.

You may also offer in-store merchandising a service where you will go into their shops, help the retailer make the order, stock his fixture and in addition possibly supply display stands and promotional material. This makes you a more attractive proposition to the retailer while, at the same time, allowing you to retain some control over the way the product is marketed to the consumer.