The offline wholesale market is known to compete on the price points which is eventually draining the wealth of the industry. Even with access to capital and other resources, these businesses have not come out of their shell even in the 21st century which is, in turn, harming their own set-up. LiveSauda is going to list 7 major reasons behind the crash of the offline wholesale business in India.
Reason 1:
Bad Margins: Most of the businesses are not doing anything clutter-breaking to retain their customers. With a thousand more like them in the market, many wholesalers lose business while fighting a price predominant fight (they lower the price to win business) which ultimately leaves them with either bare minimum profits or loss of the market share.
Reason 2:
Credit-Based Markets: There is no denial of the fact that giving petty loans and credit allowance to the retailers are important factors which add to the goodwill of the wholesaler. However, extended credits have harmed more businesses than anything. This situation is known as the credit crunch and most of the wholesalers get trapped in it once in the lifecycle of their business.
Reason 3:
Dead Stock: With seasons and the generation changing, it is essential for a wholesaler to keep everything possible to pacify the ever-changing market demands. However, sometimes keeping so many products can lead to having dead stock which is nothing but an indirect loss for the wholesaler. For this reason, it is recommended for sellers to do consumer behaviour analysis to stock only those goods which are likely to be in demand.
Reason 4:
Inefficient Sales Person:
Human touch is an important aspect of the offline business and sometimes hiring the wrong sales representative can cost a lot more than a business can contemplate. An inefficient salesperson adds is a liability on the company. They may harm a business’ profit flow and even reputation. It is therefore advised to set achievable targets for the sales reps to access their performance periodically.
Reason 5:
Skyrocketing Shipping Cost: The prices of fuel and transportation are increasing exponentially and while complying with such costs businesses often lose a major chunk of their profits. Therefore, small shipments from small wholesalers may incur losses than bearing profits.
Reason 6:
Insurance: The traditional wholesale businesses still believe in sipping their products and goods without getting them insured. So sometimes, when these uninsured goods get lost or are destroyed due to some natural or unnatural reasons, put the wholesalers under substantial debt burden.
Reason 7:
Digitalization of the Economy: With the B2B markets shifting towards online means of marketing to provide an omnichannel buying experience to the customers, the offline wholesalers take the brunt of not going online.
We at LiveSauda has been studying the wholesale markets very closely and hence recommend wholesalers to create a USP (unique selling point) around their products, monitor their costs and try to apply digital marketing hacks to grow their business in a highly digitalized, globalized and well-integrated economy.
