Many small eCommerce sellers complain when their competitors’ sell at lower retail prices than the wholesale prices they can buy at. It’s a understandable frustration. Almost always, the reason is because, their competitor is bigger and buys in larger quantities than they can. The competitor is getting better price breaks because volume buying lowers wholesale prices.
When buying from a real wholesaler, your price per unit will go down as you increase your order size.
Example of Volume Buying
For example: from 1 to 100 units of a product per purchase, the wholesale price per unit might be $5 each. When you buy from 101 to 250 units of a product, the unit price might come down to $4.50 each. Wholesalers only make profits when they sell in volume because they already make such thin profits per unit. The more you buy per order, the better the price per item they can allow you.
So you may see charts like this on a supplier’s site:
1-100 $5.00
101-250 $4.50
251-500 $4.00
501 -1000 $3.75
If you buy 99, expect to pay $495
If you buy 299 of them, expect to pay $1196 and etc.
Can’t do Volume Buying?
Don’t be too concerned! Although many online sellers think they have to slash prices ridiculously low to compete. It doesn’t have to be that way! There’s more to selling products than having the lowest price. Buyers will spend more with retailers that offer value-for-money. Successful selling depends on building a customer’s trust and providing something of value that’s worth the higher price to them.
You may begin by drop shipping or even buying in small quantities. As soon as you find products that sell quicker than others, start placing larger orders and negotiate for better Volume Price Breaks. Then you can reach bigger and bigger tiers of discounts and you will grow your online business out of your own cash flow.