Wholesale Discounts and Deals as Part of B2B Marketing

Wholesale businesses use a variety of marketing strategies and advertising methods to find new customers or to increase the average order value of their current clients. From wholesale loyalty programs to direct advertising, there are various ways to increase wholesale sales. Sales and special offers are a great way for suppliers to encourage purchases of specific goods or product categories. With the help of wholesale discounts, distributors can incentivize sales of their most profitable products. Special offers can also be used to quickly liquidate stock that’s perishable or drops in value for another reason. In this blog post, we’ll show what wholesale discounts are and how suppliers can benefit from them.

Key takeaway: Wholesale discounts can help a distributor acquire new customers and incentivize current clients to order more products. Low profit margins of wholesale businesses are one of the reasons why some suppliers rarely offer discounts.

What Are Wholesale Discounts

There’s not a definitive answer to what exactly wholesale discounts are. Some people use this term when they’re referring to the pricing of wholesale products which is understandably lower as they’re sold in bulk. Others associate the phrase with the business model of wholesale clubs. They offer lower prices to customers who pay a yearly (or monthly) fee to access these stores. In the context of B2B sales, the term wholesale discount means that the prices of certain products offered by a supplier are lower compared to their regular price. These discounts can be bound by additional terms and conditions like minimum charges or order quantities, a specific time frame, or a deal available only for new customers.

Types of Wholesale Discounts

There are various ways for suppliers to offer special deals to their customers. For example, when negotiating with new customers, the discount can be set in the wholesale purchase agreement. It can also be bound by different terms and metrics like the revenue generated over a specific period or the average order value of purchases. Here are some examples of different retail and wholesale.

1. Percentage discounts. A supplier can offer percentage discounts (e.g. “10% off”) as part of their B2B marketing strategy. They usually work best for cheaper products.
2. Dollar discounts. These discounts are fixed amounts (e.g. “$50 off”). They are the preferred method to offer discounts on expensive products. 
3. Freebies. “Buy one, get one free” is a popular discount type. Offering freebies can be lucrative for both business and retail clients.
4. Additional value. In addition to price reductions, some businesses offer discounts in the form of increased value for their customers. Free shipping is a good example of that discount type.

How Wholesalers Can Benefit from Discounts

Wholesale discounts have both pros and cons. They can be suitable for some businesses but they might have more drawbacks in certain niche markets. Let’s examine the main advantages of wholesale discounts.

1. Increased sales. With the help of discounts, distributors can increase their sales. More importantly, they can incentivize customers to purchase specific goods or product groups. This gives the business more flexibility and can have benefits in aspects like wholesale inventory management and omnichannel marketing.
2. A competitive advantage. When they wish to find suppliers, businesses often look at prices as one of the primary factors. Ergo, a wholesaler who frequently offers discounts and promotions has a competitive edge over other companies that are less flexible.
3. Improving the relationship with customers. Loyalty programs or special discounts can improve the relations between businesses. With their help, repeat orders and referrals are more likely.

Disadvantages of Wholesale Discounts

Although business owners can benefit from offering discounts, there are drawbacks to this wholesale marketing approach. Here are some of them.

1. Reduced profit margins. Distributors have much smaller profit margins compared to retailers. Therefore, discounts can lead to a significant reduction in profits and sometimes even losses.
2. Increase demand for products. When choosing what wholesale items to sell, businesses should carefully assess the supply and demand of different product categories. If a supplier offers a wholesale discount for a certain product, that might spike the interest and lead to a surge in order volume which can be hard to supply.
3. Over-reliance on discounts. Relying primarily on discounts to acquire new customers can have a negative impact on business resilience as some customers might switch to another supplier if the business can’t keep up with the discounts. Furthermore, frequent discounts can lead to difficulties in choosing the optimal pricing strategy. Check out our post on how to manage a wholesale business for more information.

Different Wholesale Pricing Models

Discounts can be a powerful marketing tool for wholesalers. However, having the right pricing strategy is even more important. Here are some of the most popular pricing models.

1. Competitor-based pricing. The method includes checking competitor’s prices and having similar pricing to products. However, other factors like customer loyalty programs, overnight shipping costs, and discounts should also be taken into consideration.
2. Cost-plus pricing. This model is fairly simple – it sums all the costs of purchasing a product and adding a small profit markup. The markup can depend on the supply and demand of goods and can be different for varying product categories. 
3. Surge pricing. This model is suitable for products that have surges in demand based on seasonality or other factors. During periods of high demand, the price surges, and wholesalers are able to maximize profits.
4. Key-value item model. This strategy revolves around offering certain frequently-purchased products at lower prices and with little to no profits. However, customers are also likely to purchase other goods that have higher profit margins. This pricing strategy is often called loss leader pricing.

Frequently Asked Questions about Wholesale Discounts

Whether you’re managing a seafood distribution business or you are a broadline supplier, the features of BlueCart can be the right choice for you. In addition to our useful software solutions for wholesalers, we also offer practical tips in our blog posts. Below you’ll find the answers to commonly asked questions about discounts in the wholesale distribution sector.

Can Individuals Use Wholesale Discounts?

Yes. Many individuals can benefit from purchasing everyday household products in bulk. That’s commonly done through wholesale club membership. However, some families and individuals also purchase products from local suppliers that have low minimum order quantities (MOQ). The products that individuals usually purchase at wholesale prices are non-perishable food products like flour, canned food, pasta, dried products, or sweets. People who do home canning can also purchase from wholesale produce distributors. Wholesale coffee distributors might also offer special degustation sets, specialty coffee, or other products aimed at retail coffee enthusiasts.

What is Discount Marketing?

Discount marketing is a strategy that focuses on special offers and discounts as an incentive for customers to choose your products and services instead of a competitor’s. Here are some of the benefits of discount marketing.

1. It can be equally profitable for both retailer and wholesale discounts;
2. Discounts create a sense of urgency in customers;
3. Discounts can be used in all stages of the marketing funnel;
4. Special deals can help other marketing channels like social media, email marketing, and SEO;
5. Thanks to special offers, businesses can free up warehouse space or sell products with low demand more easily.

Can You Buy Wholesale Discounted Products and Sell Retail?

Yes. Purchasing products in bulk at a wholesale price and selling them with retail profit margins can be a profitable endeavor. You can buy these products and sell them at online marketplaces and eCommerce platforms such as Amazon or eBay. Another major thing to consider is what products to buy. It’s recommended that businesses purchase products with high demand from wholesalers. These could be trendy products that are expected to sell quickly or goods that are always in high demand but might have high competition as well. Product research and marketing are the two major elements of this business strategy.