What Is B2B Wholesale? Benefits and How To Get Started

B2B wholesale refers to selling products to another business, in bulk and at a discount. It’s a massive market, generating hundreds of billions of dollars in sales each month in the US.

Today, businesses of all kinds are using the latest B2B ecommerce platforms to access wholesale customers. Many well-known consumer brands, like Your Super, Public Goods, and Bark, have pivoted to a DTC and wholesale hybrid model.

The benefits of wholesaling are clear: higher order volume, less time spent on manual entry and admin tasks, and lower customer acquisition costs. But the challenge remains: how to take advantage of B2B retail.

This post explains how wholesale ecommerce works, and we’ll go over some tips for creating a B2B business plan to help get you started.

What is B2B wholesale ecommerce?

B2B wholesale refers to a business-to-business sales model where companies sell goods or services in bulk to other businesses, rather than to individual consumers. Wholesale selling involves offering products at discounted prices to retailers, distributors, or other businesses for resale or internal use. B2B ecommerce transactions consist of larger quantities, negotiated pricing, and partnerships.

How B2B wholesale ecommerce works

The most common type of wholesale is between producers and retailers. However, there are wholesalers who sell to other wholesalers, and wholesalers—like Costco, for example—who sell directly to consumers.

Wholesale is often thought of as a traditional sales channel with a less than ideal buying experience. But technology and changing B2B buyer behavior has driven a change in wholesale ecommerce.

Today, retail ecommerce businesses are selling wholesale to drive growth, without enormous capital investment or high risk. With the right B2B ecommerce tools, businesses can automate many tasks, from customer signup to checkout, with features like wholesale-specific pricing and outsourced fulfillment.

“Without a doubt, the biggest myth in wholesale is that the self-service ordering model used in retail won’t work in a B2B setting. As in retail, business customers benefit greatly from the time and effort savings of online ordering, in their own time, with full visibility of the status of their order.” —Ben Chidiac, Cofounder, Beard & Blade

B2B wholesale business examples

The brands mentioned in the introduction to this article aren’t the only ones to successfully adopt a multichannel approach. Leveraging both B2B wholesale and direct-to-consumer sales can be the key to sustainability in today’s competitive retail climate.

Here are some other innovative wholesale B2B business examples:

Brooklinen

Luxury bedding brand Brooklinen uses a B2B model to supply high-quality products to hotels and other businesses. They have a separate Shopify store for business buyers, so they can tailor their shopping experience depending on customer type.

Momofuku

Restaurant Momofuku sells their grocery products DTC, but they also use a B2B wholesale marketplace to distribute inventory to other businesses. Using a marketplace gives Momofuku access to a prebuilt network of retailers.

Supergoop

Skin care company Supergoop sells wholesale on Faire and has a separate B2B website serving retailers. Plus, the brand maintains a consumer marketing strategy filled with retention features, such as a loyalty program and a strong social media presence. It’s a comprehensive example of omnichannel commerce in action.

Himiway

Himiway, an e-bike brand, uses a B2B wholesale model through a dealer program for businesses interested in selling their e-bikes. They also maintain a DTC presence through a separate store.

The benefits of selling wholesale online

It’s long been thought that B2B customers shunned digital channels. Traditional wisdom held that buying wholesale was too complex to be conducted online, which is why so many suppliers haven’t made an investment in ecommerce just yet.

But studies from as long ago as 2017 suggest the B2B buyer has long since changed. The availability of information through digital channels has made it easier for buyers to collect information independently. Wholesalers have fewer opportunities to influence buyers’ decisions in person.

Today, there are many undeniable benefits of wholesale ecommerce. Going online can:

• Improve the buyer experience: Modern wholesale customers are armed with information and don’t always need to speak to a representative before purchasing. Ecommerce can help wholesalers anticipate buyers’ needs, aid the buyers’ research process, and guarantee they can easily access content throughout.
• Automate wholesale processes: From signup to checkout, you’ll spend less time managing orders over the phone and email and more time on the strategic needs of your business.
• Lower the cost of doing business: By selling items in bulk, you get to take advantage of larger orders and less marketing spend, which generally leads to making more money per unit. Shipping in bulk to fewer customers can also lower fulfillment and operational costs.
• Make it easy to enter new markets: You’ll also be marketing to a new audience that’s never heard of you. When an established retailer teams up with your business, you can leverage its supply chain to reduce risk and lower setup costs. Wholesalers also save money on marketing by getting access to the retailer’s existing customer base.

“The way that you build a modern brand, in our opinion, is that you have to be in as many touch points as possible, especially because there’s more dropshipping brands than ever. There are more brands that pop up every day. And there’s validity to being in stores.” —Jon Shanahan, Cofounder and Chief Marketing Officer, Stryx

How to sell wholesale to B2B customers

1. Choose a wholesale sales channel

To open a wholesale operation, you’ll need a sales channel to connect with customers. Popular options include:

• A password-protected online storefront: A well-designed private B2B ecommerce website can handle complex wholesale buyer needs, such as bespoke orders, multiple fulfillment locations, and unique terms and conditions.
• B2B wholesale marketplaces: Platforms like Faire, Abound, and Amazon Business connect you with a preexisting pool of potential buyers. However, the platforms will take a percentage of sales and control sales terms. Diversify your sales channels to avoid over-reliance on a single marketplace.
• Trade shows: Despite the pandemic’s lasting impact on in-person events, trade shows remain a valuable way of pitching to retailers. Make the most of your attendance by collecting prospects’ details and following up with personalized offers.

“In addition to marketplaces, we also sell through our own website and attend trade shows to reach potential wholesale buyers,” says Luke Lee, CEO of Palaleather. “It helps to diversify our sales channels, creating more robust and stable revenue streams.”

2. Develop a wholesale pricing strategy

To find the right wholesale prices, calculate your unit manufacturing cost, which should include operational expenses. Once you have a number, double it to set your wholesale price and ensure a 50% profit margin. 

Alongside a wholesale price, you might also want to calculate a suggested retail price (SRP) to prevent undercutting and maintain brand equity. Suggesting a retail price also promoted a healthy margin for all of your retail clients.

For example, if you’re selling luxury goods and a retailer undercuts your SRP by 30%, customer perception of your brand may be negatively impacted, and other clients may lose sales.

3. Set minimum order quantities and volumes

Wholesale customers can access lower prices because they bulk order products. To keep your business profitable, implement minimum order quantity (MOQ) and minimum order volume (MOV) thresholds for your buyers.

• Minimum order quantity (MOQ) is the minimum number of units a B2B buyer needs to order each time they purchase.
• Minimum order volume (MOV) is the minimum a wholesale customer needs to spend on each order.

Consider the cost of goods, the price of shipping items in bulk, and any other fees baked into wholesale ecommerce (such as payment processing fees). Also think about offering lower MOQs and MOVs for first-time customers to attract smaller businesses.

4. Offer flexible wholesale payment terms

Most B2B customers don’t have the cash to pay for orders upfront and may need to purchase via credit or other payment arrangements.

Because of this, your B2B ecommerce platform must have the option to offer post-delivery payment, allowing your customers to pay after they have received their goods—for example, net 30 days from delivery. Features like automatic reminder emails can help to make sure invoices get paid.

“The number one myth is that businesses only want to buy with credit cards when, in reality, they like to use many types of payment options. You need to have multiple payment methods, including ACH/echeck, debit and credit, digital wallet, email/text payments (P2P), and even cryptocurrency.” —Renzo Costarella, Business Development, Flint

5. Streamline wholesale logistics with a 3PL

Shipping large quantities of stock to customers will also be a challenging part of running a wholesale B2B business. Get fulfillment support by outsourcing shipping tasks to a third-party logistics partner (3PL).

With a distribution partner, you send inventory to an international warehouse and your 3PL picks, packs, and ships orders to your B2B customers.

“The back-end logistics are very different for wholesale compared to DTC, but you have to be good at both, and you have to have a 3PL that can do both,” says Jon Shanahan, co-founder and chief marketing officer at Stryx. “I don’t know a single person that could handle a wholesale channel if they were fulfilling orders themselves.”

If you do decide to keep fulfillment logistics in-house, use a multichannel inventory management system to prevent one channel taking inventory away from others. 

Jurrien Swarts, cofounder and CEO of Stojo, says, “In terms of logistics, you’ll need to make sure everything is shipped in retail-ready packaging, and that the master and inner cartons are sized and labeled appropriately for each retailer’s specific requirements.”

6. Run a B2B marketing campaign

Develop a B2B sales funnel using your target audience’s most popular marketing channels. 

For today’s B2B buyers, that might mean harnessing marketing strategies traditionally associated with DTC customers—such as making user-generated content for social media.

Tomer Tagrin, CEO of Yotpo, says, “There’s a myth that user-generated content doesn’t matter in wholesale or B2B. In reality, customer content is the cornerstone of all ecommerce marketing activities—from SEO to paid acquisition and more.”

Don’t rely solely on a digital presence, however. Actively promote your brand both online and offline. Collect and use customer reviews throughout the buyer journey to build social proof into your marketing.

“Don’t get trapped in the ‘If you build it, they will come’ mentality. You have to go out there and hustle: on the phone, at trade shows, and in person at stores. Simply being alive and visible in the digital space isn’t enough unless you push your brand in the real world.” —James Brooks, CFO and Founder, The Elephant Pants

7. Prioritize B2B customer retention

B2B wholesale relies on repeat custom, far more than when selling B2C. To retain customers, you need fair pricing and reliable product availability with a positive customer experience.

Enhance your B2B customer experience by:

• Delivering information on how to best market your products
• Sharing industry knowledge, such as emerging trends or customer preferences
• Give sneak peaks at upcoming inventory to create a sense of exclusivity and excitement

“Ultimately, you’re better off competing to have the best customer service than trying to have the most affordable products,” says Simon Slade, founder of SaleHoo. “Focus your energy on providing well-trained customer service reps and lots of perks.”

Also invest in your custom service resources for when things inevitably go wrong—whether due to supply chain issues or fulfillment mishaps. Comprehensive customer support makes the most of the service recovery paradox: you can build more goodwill by resolving B2B customer complaints than if complaints never arise.

From wholesale to full scale with Shopify

Incorporating a wholesale channel into your business isn’t a decision to take lightly. Any user experience you’re delivering to your customers needs to be top notch, regardless of whether they’re the end consumer or a B2B buyer.

Luckily, ecommerce solutions like Shopify can help you deliver on those experiences—without the need for a complex or expensive back end.

Use Shopify’s B2B ecommerce platform to:

• Design a store for DTC and wholesale ecommerce.
• Manage inventory levels with one inventory management system.
• Update product information across all sales channels with PIM, CRM, POS, and B2B ERP integrations.
• Create custom price lists and percentage discounts.
• Automate and review customer signups.
• Let customers purchase, track, and reorder products.
• Review wholesale orders before invoicing.
• Streamline inventory and order management.