Profit margin is the blood and bones of any business that sells diamond painting kits in a competitive retail market. Although it is easier to obtain it through distributors or wholesalers, it is causing a huge consumption of your possible profit. Finding a way to cut out the middlemen and get a business relationship with a diamond painting factory is the best plan as it will help you increase your profitability significantly. This is a strategy that changes your cost base and provides you with unprecedented control over your product.
The most obvious advantage is the removal of intermediary markups but the benefits are far more profound. Direct factory relationships open the door to lower-cost customization opportunities, volume purchasing and simplified logistics, which together build a more robust, more profitable business model. It takes more effort but the financial advantage makes it an attractive strategy to serious retailers.
Reducing Costs and Maximizing Control
Doing away with Wholesaler Markups
This is the most direct way to greater margins. When you purchase with a wholesaler, you are paying a price which includes their own profit margin, which was tacked on to the factory price. When you source at the diamond painting factory, you will pay the source price, and you have an instant profit improvement of one unit.
Economies of Scale by Bulk Ordering
The factories provide different prices according to the volume of the order. The larger the order, the cheaper the unit cost. When you group up your purchases and order in bulk you are able to get a much better cost price than you could have ever had when using a third party distributor.
Cutting down on Packaging and Logistics
Direct work enables you to package efficiently to ship goods at a lower dimensional weight cost. Moreover, you may also negotiate directly with freight forwarders to receive the best charges on either sea or air shipping, instead of paying the logistics charges that are already built-in by the wholesaler.
Discussion of Terms and Price
You can use the leverage to agree on payment terms that favor your cash flow like a 30 percent deposit and the remaining to be paid after inspection or shipment. This is much more elastic than the down-payment made by most wholesalers.
Competitive Business Benefits
Creation of Exclusive Product Lines
One of the benefits of having a direct factory relationship is that you can design something of your own, something exclusive and that no other retailer will be able to sell the same product. Such exclusivity removes price competition on such products and gives you an opportunity to charge a premium, which can further boost your margins and increase your brand presence.
Quick Responsiveness to Trends in the market
In the absence of a wholesaler as an intermediary, you are able to respond to emergent trends more quickly. Working with your diamond painting factory, you can create, produce, and roll out new kits based on viral themes or customer requests far more quickly and capture sales before the trend moves on.
Increased Brand Equity through Majoring of the own label
You can make complete kits under your own label in the factory, with your own packaging and inserts. This transforms a generic product into a branded property, creating customer loyalty and enabling you to create a recognizable brand that will justify a higher price point.
Direct Quality Control and Consistency
You establish the quality criteria with the factory. Given that you have your own QC procedures and inspections, you are guaranteed that all kits are of your specifications.
Conclusion
The best approach that any retailer can have to maximizing profitability and creating a sustainable brand is working directly with a diamond painting factory. It also takes more capital investment and hands-on management, but the returns are high: a significantly lower cost of goods, the ability to exercise exclusive control, and the ability to control quality and branding fully. It is not merely a change in strategy, but a change of establishing a more valuable and competitive business through purchasing products at a lower price.
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