This is how wholesale business is getting interrupted due to the startup businesses
The online retail business has changed the way the urban people in India shop. Initially, the retail cloth store and the local Kirana considered the e-retail their rival. However, this is no longer the case. In fact, these kirana stores today are buying wholesale goods online.
The startup ecosystem has completely changed the potential market
The startup ecosystem has awakened the 100 million dollar market today. This has been done in order to digitize supply chain and also the attaining cycle of the neighboring stores, the manufacturers and the wholesalers that still are unbranded.
There are certain companies that are building data-driven intelligence around the wholesale system that is existing as of now.
It is for this reason that the shopkeepers, as well as the manufacturers, are trying to reduce the cost, simplify the process and also widen the discoverability throughout the nation.
These companies also provide the marketplace to the wholesalers, manufacturers and retailers across the electronics, automotive, home and the fashion industry.
What do the shopkeepers have to do?
It is important for the shopkeepers to remain on the top of the fashion trends. They also have to ensure that they provide unique designed products to their customers at a reasonable price.
Thus there are a number of procurement problems created and these include buying products in bulk in credit and also sourcing from the different types of manufacturing hubs. This is done because the supply of cash flow is limited and this leaves a number of unsold product at the end of the procurement style.
This is what happens in an offline scenario
During an offline scenario, the merchandise passes through a number of stages and each of these stages adds their own margins. This will increase the prices of the retailers by 15 to 25 %. This escalation prevents the small retailers from availing the online commerce.
The reasons why a lot of people get attracted towards these online stores are attractive prices and convenient shipping. But since the cost of procurement is high so the retailers find it very difficult to reduce their prices.
It is for this reason that they have to keep a separate inventory online and offline. The products that will help you to get higher profits can be sold offline. For such products, there would certainly be a compromise done on the quality.
There are a number of e-commerce players who initially started with a profit of merely 10-15% but later the profit margin increased to 40%.
The best option for the small retailers
In place of creating a completely new infrastructure for the small sellers, it is always a better option to help them have an online presence. This can easily be done by strengthening both the procurement cycle as well as the black end supply chain.
The front end of both the retailers as well as the sellers have to be dealt with in a very different way. If you try to forcefully fit a business that has no prior digital experience will not work for them at all.
A digital layer has to be built against the existing setup and a shared economy needs to be shared.
It has been observed that both the wholesalers as well as the manufacturers have to sell products on credit to the small retailers because of a restraint in the cash flow.
Moreover, there is also some unexploited inventory present that will have to be sold at a throwaway price at a later stage. These days these companies have a 15-day payment cycle and the wholesalers and the manufacturers have to get their payment within this time limit.
Today the manufacturers also get to read the simplified analytics that shows the geographical locations that have a minimum transaction. In order to show this colors and patterns are also used.
This is surely a win-win situation for manufacturers and wholesalers because they are able to see the cash flow in front of their eyes. This also reduces the risk of the unstructured credit.
This lowers the cost and also improves the realizations. There are also certain shops that get a delivery at the doorstep, trade assurance and also frequent and small supplies an also certain tools that will slope up to the offline sales.