I often get inquiries these days about creating a wholesale sales channel. I think it's because wholesale transactions are active in the e-commerce market. Today, I'm going to talk about how to capture wholesale as well as retail through an online store.

In recent years, wholesale has experienced its own revolution thanks to online marketplaces like Amazon, Wish, and Wayfair. While e-commerce has lowered the barrier to entry for stores and enabled direct-to-consumer brands to thrive, wholesale still offers consumers a convenient shopping experience where they can find everything they need in one place.

So why create a wholesale channel?

A new version of wholesaling, often seen in online marketplaces or small boutiques, also has advantages for brands that target consumers directly. Here are three reasons why opening a wholesale channel can benefit your business.

1. Increase sales without increasing marketing costs.

For brands that target consumers directly, they typically have to allocate a lot of their budget to marketing to grow. Every time they acquire a new customer, they incur a cost. However, by selling their products wholesale, they can let other businesses shoulder the cost of acquiring customers, and reinvest that time and budget in other areas of their business.

2. Sell your products by leveraging other brands' customers.

Just as it costs money to acquire new customers, it is no easy task to build a loyal fan base and audience. By establishing wholesale partnerships with established brands that are already well-known in your niche, you can leverage their goodwill to get your products in front of your customers.

3. Enter new markets with less risk.

Expanding your business to a new country or region involves a series of associated costs, such as warehousing and logistics, or marketing to customers who have never heard of your products. However, if you can find other retailers with existing distributors and supply chains in your new market, you can reduce these costs and help reduce the risk of global expansion.

Ultimately, the wholesale business model benefits both retailers and wholesalers by creating efficiencies: retailers gain new and complementary products to sell without investing in research and development, and wholesalers save on marketing costs by directly tapping into their existing customer base.

Three Steps to Setting Up a Wholesale Channel Using Shopify

When setting up an online wholesale business, you must first consider whether you want to focus solely on wholesale distribution or whether you also want to add the option of selling directly to customers.

1. Set a password for your wholesale store

If you want to sell your products wholesale to retailers only, you will need to create a password-protected online store so that only retailers can place orders at a discounted wholesale price. For Shopify stores, you can use the feature to password protect your store. This feature can be set up in your Shopify admin.

▲You can set the store password in Online Store > Preferences in the Shopify store admin.

You can set up a password for your store and show your products at a discounted price only to retailers. If you run a large wholesale business and are concerned about your store password being exposed to unverified retailers, you may want to consider using a more sophisticated password protection feature like Locksmith.

▲ Locksmith can restrict access to individual products, collections, or options.

Locksmith lets you control who can view your store or buy products using a variety of customization features. Customers can create accounts and set their own passwords. You can grant access to products by applying tags to customer profiles, sharing secret links, or customizing your inventory based on the country they are browsing from.

▲ Locksmith lets you choose which customers have access to which parts of your store, and in what manner.

2. Create a Distinctive Wholesale Store Front Using Shopify

For businesses that already have a B2C store but want to create a wholesale channel for retailers to purchase from, there are a few options. The simplest is to set up two stores with different URLs and restrict access with a password, as mentioned above.

If you have a large sales volume, you can also upgrade to Shopify Plus and take advantage of the wholesale channel feature. Shopify Plus allows you to create a password-protected wholesale channel within your existing store.

▲ The James Brand ’s password-protected wholesale channel store front

By creating a wholesale storefront using existing products, you can set up a wholesale channel with very little additional work. You can differentiate prices for different customer groups and apply discounts based on purchase volume. The best part is that you can see all of this separately in Shopify’s sales reports, from customer sales to wholesale sales.

3. Create a wholesale sales channel using the Wholesale Channel App

Another way to create a wholesale channel on Shopify is to use a companion app like Wholesale Club, which gives your retail customers “tiers” that allow them to receive special discounts off the regular retail price.

▲ Discount tiers in the Wholesale Club App can be specified using customer tags.

This app can also be set up to allow customers to purchase in bulk, giving them bigger discounts the more they buy.

▲We offer discounts to wholesale customers based on purchase volume, such as quantity or amount.

With Wholesale Club, you can provide access to wholesale prices only to customers who have verified their retail account. You can create a secure wholesale channel by adding these features to your B2C site as an app without having to open another store or product catalog.

Receive payment for wholesale orders

One thing that sets direct-to-consumer transactions apart from wholesale sales is the payment terms that your retail partner typically expects. Unlike general sales, when a retailer buys a large quantity of a product, they will often ask for a payment term that they expect, such as “Net X” (e.g., “Net 30” means payment within 30 days).

If a retailer asks for these basic payment terms, it means that they want you to pay them within a few days of receiving the order as a vendor. Especially for small businesses, it can be risky to ship a large order before the retailer has paid. That’s why it’s a good idea to ask for the company’s history and references and do your due diligence before entering into a business agreement.

How to add a payment period to your store

Both Wholesaler and Wholesale Club apps allow you to set payment terms for your customers. Customers are tagged according to the agreed payment terms and can also place post-pay orders when they make a purchase.

▲ You can provide preferential payment terms based on customer profiles tagged as Wholesaler.

How to request payment from wholesale customers

When it comes to actually charging a post-payment order, you have a few options. One is to save the wholesale order as a draft order in your Shopify store and email the invoice for later payment. The draft order can be processed as payment once the payment is completed, either by card, check, or bank transfer.

▲ In Draft, store owners can create orders and issue invoices to customers for later payment.

Afterpay is another solution for later payments, this app is usually used for general retail sales and stores can also offer customers the ability to pay for their purchases in installments.

▲When checking out, customers can pay for their order in installments using Afterpay.

This functionality can also be applied to wholesale sales channels, allowing you to collect payment information and pay in installments. Apps like Afterpay can automate the payment collection process without the need to manually track and verify unpaid invoices.

Find Wholesale Customers

Now that you have your store set up and your payments set up, you need to find wholesale customers. So where do you find these retailers?

Use a direct-to-consumer sales website

Often retailers will look to direct wholesale channels first, but if you're selling directly to consumers and have been successfully advertising, you've probably already had distributors contact you through your online store looking to buy wholesale products.

When you advertise online to your customers, your ads will also reach other businesses interested in distributing your products. That’s why it’s so important to have a link in your website footer for wholesale inquiries. It’s the easiest way to help anyone contact you through your website about potential opportunities.

▲ Rockwell Razors has created a wholesale inquiry form in the footer of their website for easy linking.

Participate in trade fairs

Trade fairs are one of the most classic ways for wholesale businesses to connect and find retail partners. There are special trade fairs for almost every retail category, from baby apparel and leisure to furniture and home decor. Here is a list of representative trade fairs by category. To the trade show directory  there is.

However, trade shows have the disadvantage of being expensive, having to move depending on where the show is held, and paying for a booth for participating in the show. Although trade shows are an opportunity to find new customers and make good connections, you need to first consider whether it is worth participating and operating before deciding to participate.

Participate in drop shipping or wholesale markets

Another way to sell your products to other retailers is to Doba me Modalyst  Utilizing the same online wholesale supply market.

Many retailers are looking for products to dropship or suppliers on their ecommerce stores. These marketplaces allow you to list products on your Shopify store and start placing dropshipping orders with retailers so they can sell.

Creating complementary brands

Another advantage of the wholesale channel is that you don't always need a large volume of customers to order directly from the consumer. If you have a capable retailer who is successful in selling your product, they will continue to place large orders again and again.

To find these select partners, it's a good idea to reach out directly to companies you think would be a good fit for your product, whether that's through social media, phone, or email.

A business that sells complementary products is a good start. One example of how two complementary brands can work together in wholesale is Pehr and Stokke.

▲ Pehr and Stokke have partnered to sell complementary products on their respective websites.

Stokke produces and sells a line of cribs and furniture for design-conscious families. Pehr produces a line of 100% organic sheets, which are sold on the Stokke website, and Pehr sells Stokke crib frames on their website.

The best wholesale partnerships seem to be those that are built through real-life relationships, through direct contact and trust. If there is a brand you like, and you believe that working together will create value for both parties, it is worth reaching out.

Wholesale Sales: A New Business Model

The rise of e-commerce has allowed for direct-to-consumer brands to quickly launch and grow digitally. As a result, many wholesalers have been dismissed as a declining retail trend. However, the changing way wholesale is being sold is actually ushering in a new wave of wholesale businesses in the era of e-commerce.

Direct brands looking for new sales channels and companies looking to save on marketing costs are all jumping into the wholesale business. With the right pricing strategy and proper setup, you can expand your business to new revenue-generating partners and see your products actively sold by other brands through collaborations with complementary products.