In this series, we will look at the businesses in the various stages of the Supply Value Logistics Chain, instead of looking at specific businesses, we will take an abstract look at the value chain in this link of the supply chain. This can be used as a guideline or framework to choose a business idea.
This is part of a series on How to Start, Run, Grow & Fund a Business in South Africa. These pages have to be read in order:
- How to Start, Run, Grow & Fund a Business in South Africa (using what you currently have)
- Choosing the right Business Idea for You
- Writing the Business Plan
- Supply Value Logistics Chain – Research and Understand Your Industry
- Raw Materials Business
- Equipment Business
- Skills Business
- Manufacturing Business
- Distributor Business
- Wholesale Business
- Test if Business Idea is right for you
Today we will look at the wholesale business. A simple Supply Value Logistics Chain will look something like this:
A wholesaler is a business that buys goods from a manufacturer (or distributor) and sells goods in large quantities at low prices, typically to retailers.
An example: I buy a box of 100 of something, I then make up packs of 10 and sell it to a retailer who will sell one at a time.
Let’s say I buy 100 razors for R500 (R5 each), I sell them for 10 for R75 (R7.50 each) to a retailer who in turns sells them for R10 each. I did not just make R2.50 profit per item like the retailer I made R25 profit because I sell them 10 at a time.
This is going to be one of the most important businesses going forward in South Africa the only problem is that it usually takes a bit of capital to start.
We need this business, to not only provide entrepreneurs like ourselves with sales channels for local/imported products. We also need this business to provide small businesses with products to resell. If there is no distributor and there usually isn’t in small business: then as a wholesaler you play a very important role. Most manufacturers cannot sell to retail, by using a wholesaler they can expand their reach and very small businesses can buy products that they can resell.
Manufacturer > Wholesaler > Retailer > Consumer
This is the sector that I am focussing the most on at the moment, regulars will know my disdain for manufacturing with Communists (like Rob Davies, Ebrahim Patel and their friends) running the show and I have no desire to get killed in the big retail business where there are many well-established players. The wholesale market in SA needs some improvements to better serve entrepreneurs and small businesses. There are opportunities for individuals in various retail industries whether a hyperlocal business but they need better wholesale suppliers. And people can buy from wholesalers and start a retail business. Small local businesses are in a better position to compete with big retailers as they are at the right place at the right time. We need a lot more small businesses in SA and wholesalers can support this.
Now not everybody will have the means to open a wholesale business, but that is OK, but by providing retailers with good products at good prices, there is opportunity in the retail business for people who do not want to take on the big task of wholesale. I am working on a program in this field to make it easier.
Wholesale businesses on Khoi Capital
Buy & Sell Spices Wholesale