Selling Online to Wholesale Customers

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Larger companies can afford online shopping software which integrates with inventory and internal accounting, as well as EDI transactions. Smaller companies can successfully adapt existing software designed primarily for online retail sales (though without full inventory and accounting integration).

Two special issues are faced by online wholesalers and suppliers:

• Multiple discount levels based on sales and type of customer
• Verification of the purchaser's identity

You can learn a lot from visiting Grainger.com, which offers nearly 200,000 industrial and commercial equipment and supplies from 1,500 suppliers for sale to qualified business customers over the Web. When you click on "catalog," registered users are invited to enter their Grainger account number, a username, and a password. To become a registered user, you enter your Grainger account number, or set up an account at the closest Grainger branch. "Please note," reads the fine print, "that Grainger can sell only to businesses. You must have proof of business (tax ID number or voided check) when applying." Even if you aren't a registered user, you can still browse the catalog, though you won't see the best prices or information on product availability. However, you'll be able to print out an order form for faxing or mailing. Grainger can also offer EDI-based transactions for some EDI-equipped customers.

Also notice that the order form states that "Placement of an order shall be deemed acceptance of the "Terms of Purchase," which is hyperlinked, and consists of a readable, but lawyer-written document spelling out the terms of the sale. You'll also find a carefully written "Terms of Access" document to protect Grainger from copyright, trademark, and legal challenges.

You can find products by searching by category keyword, Grainger catalog number, or manufacturer model number. I requested "conveyor belts" and then purchased a package of 25 packing boxes to put on it. The order form (not the familiar "shopping cart" metaphor) recorded my additions and changes in quantity.

How can a small to medium company match Grainger's online features? Higher end shopping cart software (priced $1,500 to $10,000) can be linked to powerful online databases programmed to handle password verification, show the price level warranted by a particular customer's account, and calculate exact shipping charges based on weight and distance from the shipping point.

But here is a wholesale catalog strategy which could be implemented inexpensively for a smaller company using store creation software such ICentral ShopSite Manager 3.2 which retails for $495.

1. Set up separate password-protected directories for each customer discount level.
2. Upload product information into the online store -- pricing, SKU, graphics image file name, product description -- for one discount level at a time, using a file generated from a desktop spreadsheet which calculates prices for each discount level.
3. E-mail each of your approved accounts the URL, username, and password to enter the subdirectory which contains their company's discount level.
4. Change language of the ordering system to use a more appropriate "order form" metaphor rather than "shopping cart.
5. Consider offering a top-level browsable catalog of your products showing retail prices and assessing sales tax on purchases. Alternatively prices could be removed entirely for products at the browsing-only level.
6. Provide an online form for customers to apply for an account.

Online stores, both wholesale and retail, face the issue of authenticating purchasers' identity. Grainger requests combination of account number, username, and password for registered user entry. While most store-building software does not support presentation and verification of Customer Digital Certificates, this function could be added to prevent fraud. In the meantime, standard password protected directories may be sufficient for many kinds of businesses.