Savings and immediate availability are two advantages of buying wholesale items. In general, buying in bulk is one of the best ways to save money, and purchasing those items when they are in abundance can yield the deepest discounts. Having enough storage space and money are two potential downsides to buying wholesale items, however. These downsides primarily affect small businesses and individuals rather than large corporations who have sufficient cash flow.
The primary advantage of buying wholesale items is the savings one can get for purchasing in bulk. In fact, many companies increase the discount as a customer’s order grows. Generally, businesses can afford to give deep discounts because bulk purchases lead to less handling, packaging materials, and spoiled or expired goods. For example, a business might be reluctant to sell one case of canned tomatoes every day for less than a certain amount, but it will gladly sell 100 cases of canned tomatoes for far less. Both the business and its consumers can reap the benefits of such arrangements.
Another advantage of buying wholesale items is acquiring goods that are only available then, or only available at certain prices then. For example, some vegetables and fruits are only available mid-year, but can be stocked and preserved or frozen for months with little loss in quality. Clothing can also be purchased at times of the year when it is cheapest, like flip-flops in winter, then resold for the highest profit margins in summer.
A potential downside of buying wholesale items is storage space to put the bulk purchases. If the goods must be refrigerated or frozen, consumers need to adequately judge the space they have available. The same goes for the backroom of storefronts. In addition, these goods sometimes have an expiration date or, in the case of clothing, the items go out of style or season. These are all things consumers must take into account when buying wholesale items.
Lastly, even if a person has enough space, 40% off retail price means nothing if one does not have enough money upfront. In most cases, wholesale items must be paid for in full before the goods can be delivered and put to use. While individually these items are likely affordable, all together the purchase might be very expensive. New businesses in particular are susceptible to not having a lot of cash flow, and therefore cannot make as much profit as a business that has enough money to spend on wholesale items. The same goes for individuals who purchase food wholesale; they sometimes do not have enough money to get the deepest discounts.