• June 3rd, 2018

Toys Wholesaler’s/supplier’s challenges and opportunities

So, Which entity plays a vital role – Retail or Wholesale?

Let’s first understand where the wholesalers fit into the product supply chain cycle. The wholesalers are the entities that buy the product directly from the manufacturers or the producers. Then they sell the product to retailers, generally physical stores where the end-user can purchase it. Nowadays, retailers can also be online sellers. The role of wholesalers is vital in the supply chain as they are the distributors of the product to the business.

Why Not Wholesale?

Before you may conclude, let’s briefly understand their roles again. In simple terms, retail means selling products to the client. Agency sale/Wholesale implies that the products are sold in bulk quantities to another entity, and from there, it reaches the retailers who sell it in small units to the clients as per their requirement. Suppose you’re not a creative good or product. In that case, Wholesale can get rather dull. Much of your time will be spent managing provision, getting the product to an exact location, maintaining Inventory, and coordinating with the shipping company to get continuous logistics and supply.

You will screen potential shoppers precisely as you aren’t transacting with shady characters. Not conducting this analysis can cause a loss of funds and Inventory, neither of which you’re going to an affordable situation.

Speaking of Inventory, you will buy large quantities of your merchandise regularly from product producers; however, understand fulfilling big orders within a decent timeframe is hard. If your product is fast-moving and reaches the retailers on time, the stock may finish like anything. And however, if you are slow, the wholesale business might quickly wipe out your capital.

In general, Wholesale is a cakewalk for people who can stock the product and disburse it to market expeditiously. In Wholesale, you will interact with business people, not the general public. Wholesale will be your business model if you can do everything mentioned above.

Day-to-day Challenges by Wholesale Distributors

According to recent studies, the wholesale distribution trade has annual sales of roughly $7 trillion. Alone within the USA, the Wholesale distribution trade includes around 330,000 companies. Wholesale distributors have served a vital role in the distribution and flow of products for over 100 years and are a drive in the economy. Still, the challenges they face these days” are new and more significant than ever.

A wholesale distributor is a bridge between the product manufacturer and the retailer. The Wholesaler connects with the end-users of the product. To profit as a wholesale distributor, your products must sell at a markup. But since you can not sell the products directly to the users and have a middle position in the supply chain, you may find yourself in a difficult situation.

The merchandiser usually asks for a high-profit margin, considering the running value increases daily. Take the example of Port UAE, where the operating cost of the merchandise is typically high owing to high Rental.

Manufacturers directly connect with the customers and can now transact directly with them, cutting your share. The manufacturers can also offer better prices to the retailers as they skip the profit earned by wholesalers. Retailers are good at buying products directly from them, as they can enjoy more significant profit margins.

Mega-retailers equivalent to Wal-Mart, online shopping firms like Amazon or Souq purchase most of their merchandise directly from makers, bypassing wholesalers altogether. These retailers don’t want wholesalers because they can stock vast quantities and operate warehouses. These superstores and warehouse clubs are progressively taking market share from different wholesalers and currently account for quite sixty percent of sales of general merchandise stores, up from merely thirty-five percent ten years ago.

Wholesale distributors should specialize in strategically developing new ideas in this advanced era. They’ll reply to these challenges and find solutions that make a competitive market and guarantee their gain. As necessary, they must sharply rework their organizations from a slow, tactical, associated reactive culture to agile, quick, and strategic learning. Today’s challenges build the necessity for quick and fast, decisive actions. As mentioned, the wholesalers must run on tight profit margins. You’ll need to keep your business as lean as possible. You want to have only as much Inventory as you can sell to ensure you won’t end up with dead stock.

So when figuring out how much Inventory to stock, it’s always a good idea to know how much your retailers order monthly. And here’s where business intelligence comes into play.

Also, Toy wholesalers should look for vital hazards related to the merchandise’s storage, handling, and transportation. They should implement tight safety standards to avoid system failures and readiness for potential problems.

Provider and retailer Consolidation

Toy wholesale distributors face stiff competition from national retailers and are losing market share. To survive in this dynamic environment, they must invest in technology to identify and address problems quickly, offer competitive prices, and efficiently handle challenges such as online promotions and rising prices. To achieve this, wholesalers should invest in technology solutions that optimize Inventory, streamline operations, and enhance gains by connecting data, individuals, and processes.

These solutions will provide visibility and transparency in the supply chain, enabling wholesalers to examine bottlenecks and failure points and make timely decisions regarding buying and refilling Inventory to reduce out-of-stock while reducing Inventory. Investing in technology in warehouse and transportation management systems will increase warehouse and operational productivity and accuracy and reduce costs. Moreover, technology will provide valuable insights into customers’ ordering patterns, revenues, margins, and products, enabling wholesalers to optimize freight movements and reduce labor, fuel costs, and delivery time.

By leveraging technology solutions, wholesalers can determine the profitability of each toy supplier and evaluate their desirability based on defect rates, on-time delivery performance, and fill rates. This information will enable wholesalers to improve customer and provider viability and decide which suppliers to work with.

In conclusion, investing in technology is critical for wholesale toy distributors to survive and thrive in the current competitive environment. By providing valuable data and systems for in-depth analytics and strategy development, technology solutions can help wholesalers make quick and decisive actions to stay ahead of the competition.

The Opportunities:

•  Becoming a market leader with efficient digital order management and E-commerce systems
• Gaining a competitive edge with the quick order process and more considerable order accuracy
• Capturing the wave of B2B patrons looking for associate omnichannel as per buying expertise
• The previous manner of doing things is already in its reply, and agency sellers who revolutionize into the longer term can ultimately commence on high.

SWOT analysis is a valuable tool to assess a business’s strengths, weaknesses, opportunities, and threats. Let’s analyze the challenges and potential for growth for a toy wholesaler in today’s market:

Strengths:

1. Wide Product Range: As a toy wholesaler, you have the advantage of offering a diverse range of toys, catering to different age groups, interests, and trends.
2. Established Supplier Relationships: Strong relationships with toy manufacturers and suppliers allow you to access various products and negotiate favorable pricing and terms.
3. Distribution Channels: Your established distribution channels enable efficient delivery of toys to retailers, ensuring prompt availability and convenience for customers.
4. Industry Expertise: Experience and knowledge in the toy industry give you insights into market trends, customer preferences, and upcoming toy releases.

Weaknesses:

1. Price Sensitivity: The toy market can be highly price-sensitive, with customers seeking competitive prices. Balancing profitability with competitive pricing can be a challenge.
2. Seasonal Demand: Toys often have seasonal demand, with peaks during holidays and special occasions. Managing Inventory and cash flow during off-peak periods can be a challenge.
3. Changing Trends: The toy industry is influenced by rapidly changing trends, driven by popular movies, TV shows, and gaming trends. Keeping up with these trends and predicting their longevity can be challenging.

Opportunities:

1. E-commerce Expansion: The growth of e-commerce presents opportunities to reach a broader customer base and explore new markets beyond local boundaries.
2. International Markets: Exploring international markets can lead to new business opportunities, especially in emerging economies with rising toy consumption.
3. Sustainable and Educational Toys: There is an increasing demand for sustainable and educational toys. Capitalizing on this trend by offering eco-friendly and educational toy options can attract environmentally conscious and mindful consumers.
4. Customization and Personalization: Offering customized and personalized toy options allows you to tap into the growing demand for unique and individualized products.

Threats:

1. Competition: The toy market is highly competitive, with numerous wholesalers, retailers, and online sellers. Competing on price, quality, and innovation is essential to maintain a competitive edge.
2. Counterfeit Products: Counterfeit toys can negatively impact your reputation and customer trust. Ensuring the authenticity and safety of your products is crucial.
3. Economic Factors: Economic downturns, consumer spending fluctuations, and disposable income changes can affect toy sales.
4. Regulatory Compliance: Compliance with safety regulations and standards, especially for children’s toys, is essential. Failure to meet these requirements can result in legal issues and reputational damage.

To leverage growth opportunities, a toy wholesaler should focus on the following:

1. Diversifying Product Offerings: Continuously expand your product range to cater to evolving customer preferences and emerging toy trends.
2. Enhancing Online Presence: Invest in a user-friendly and visually appealing e-commerce platform to reach a wider audience and improve customer experience.
3. Collaboration with Retailers: Strengthen partnerships with retailers by offering promotional support, training, and marketing materials to help drive sales.
4. Market Research and Trend Analysis: Stay updated on industry trends, conduct market research, and analyze customer feedback to anticipate changing demands and stay ahead of the competition.
5. Emphasizing Quality and Safety: Prioritize quality control and safety measures to ensure customer satisfaction and build trust in your brand.

Toy wholesalers can position themselves for growth in today’s competitive market by addressing weaknesses, capitalizing on opportunities, and mitigating threats.