How Word-of-Mouth Affects Wholesalers

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Monday, June 20th, 2016

Communication Via Distribution Channels Can Indicate Need for Wholesale Financing

Distribution channels are the conduit industries that convey products from the original manufacturer to the end consumer. Wholesalers, also known as distributors, acquire goods from the manufacturer, warehouse them in a distribution center, then sell and deliver them to retailers.

For wholesalers, as in other industrial sectors, perception is reality. Just as retailers depend on consumers to purchase their goods on a regular basis, wholesalers depend upon retailers and suppliers for their businesses to succeed. Their reliability and accountability are paramount. A wholesale company’s reputation and livelihood rest on word-of-mouth industry commentary from the businesses they serve -and their competitors, too. Therefore to thrive within a very competitive industry, wholesalers must anticipate the needs of their ancillary businesses and meet them.

The successful wholesaler will have these strengths:

  • Deciding which products to purchase and distribute.
  • Taking finished goods, such as apparel, and ensuring these are purchased by retailers and offered to consumers.
  • Adequate storage facilities.
  • A strong distribution funnel comprised of marketing and sales staff to work with retail buyers.
  • Superior transport and logistics systems.

Since wholesalers remain competitive by utilizing their industry’s equivalent of keeping an ear to the ground, they may be highly aware of how their business it perceived throughout their supply chain. This intelligence can assist them to upgrade their internal and external communication funnel, to provide even better customer service. Word-of-mouth communication also allows wholesalers to learn what their competitors may be doing, such as utilizing a more effective inventory system to improve communication with retailers. This information also allows wholesalers to realize which organizational changes they require to keep pace. When the word on the street indicates a need for change to keep pace, business owners will likely seek distribution channel wholesale financing for additional capital to upgrade their operations and remain competitive.

Quick, Reliable, Trusted, Wholesale Financing Options

Organizational upgrades may not be the only reason wholesale businesses need increased cash flow. Since timeliness and reliability are key components to any successful distribution channel, when a retailer communicates a need for additional products due to unexpected consumer interest, wholesalers must respond quickly to meet their clients’ needs. This can create financial issues for any business, as an unexpected or unusually large order or reorder may catch wholesalers short of cash flow to meet demand. They must obtain the additional product from suppliers who may not be willing to extend them credit. At this point, business owners will be actively seeking a fast wholesale financing option.

Even if the company is in good standing with their banker, the timeline for a traditional loan decision may be longer than a supplier or retailer is willing to wait. This is not a viable solution. Being a reliable customer to suppliers and providing the best customer service to retailers is an important component of any successful wholesale company. Whether through advertising, online searches or again, word-of-mouth, many wholesalers have learned about alternative financing companies and have established successful, long-term financing relationships. Unlike banks, National Business Capital helps with every step of the process to obtain the additional liquidity required to place the order and satisfy the supplier’s payment window.

Many business owners in the distribution channel supply chain may have been aware of alternative financing firms, but have been concerned about a less than spotless FICO or even a open tax lien. They are relieved to learn that alternative financiers use realistic underwriting criteria in making their loan decisions. Also that poor credit and tax liens will not automatically disqualify an applicant. The best part of the process is the speed with which a financing decision is made, in 24 hours or less, and that the money is made available in days. This provides ample time for wholesalers in either scenario to upgrade their operations and/or pay suppliers to ensure retailers and consumer demand is met. Alternative financing companies offer many of the same wholesale financing options as banks: business lines of credit, small business loans, and equipment financing, among others. In the highly competitive distribution channel industry, word of mouth is vital for keeping a competitive edge. For wholesalers who discover how to obtain fast access to working capital however, alternative financing may soon become their best kept company secret!

As a leading alternative financing company, National Business Capital assists businesses obtain the additional capital they require to grow. In this blog series we provide information of value to many of the industries that we serve. For wholesalers who may have questions regarding wholesale financing, please contact our Business Consultants at (888) 888-9124 for a personal consultation.

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