How Profitable Is A Wholesale Business? (Updated for 2024)
So you want to start a wholesale business?
And the first question that came to your mind was, “well, are wholesale businesses actually profitable?”
With a market size of $8.4T - there’s plenty of business to go around.
Especially considering:
- You could start a wholesale business with as low as $100
- Based on our data, wholesale businesses generate an average of $1.42M per year
There’s money to be made. Don’t worry.
But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a wholesale business.
Let’s dive in!
Is a wholesale business profitable?
Yes, a wholesale business is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.
For instance, since average revenue is $1.42M per year with an estimated gross margin of 30%, you could expect to recover your investment within 24 months or even less.
But of course, it all comes down to how much you earn compared to the potential revenues of your wholesale business.
To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.
Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your wholesale business is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.
Is a wholesale business worth it?
If you’re wondering if a wholesale business is worth it, the answer is a big YES. With wholesale businesses, you have the potential to earn $1.42M per year (this is based on data reported by real founders).
Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.
With a market size of $8.4T, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.
Of course, you must learn and understand every aspect of running a wholesale business to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.
You might want to consider reading more specifics about successful wholesale businesses case studies.
Examples Of Profitable Wholesale Businesses
Here are a few examples of profitable wholesale businesses, and a few more details about them:
1. Rwanda Bean Coffee ($1.08M/year)
Mike Mwenedata, a Rwandan immigrant, started Rwanda Bean Coffee Company after realizing the potential value of Rwandan coffee and the need to support coffee farmers in his home country. By reinvesting 50% of their profits back into the farming communities, Rwanda Bean has grown rapidly, expanding from 10 lbs of coffee to a container of 40,000 lbs and increasing revenue from under $3,000 to over $45,000 per month in less than a year.
Is it profitable? Yes
How much money it makes: $1.08M/year
Rwandan immigrant Mike Mwenedata co-founded Rwanda Bean Coffee Company, which increased revenue from under $3,000 per month to over $45k per month in less than one year, by sourcing and roasting single-origin coffee from Rwanda and investing 50% of the profits back into the farm communities.
2. SmartyPits ($2.2M/year)
Stacia Guzzo, the founder of SmartyPits Deodorant, was inspired to create her aluminum-free deodorant after her mother's battle with aggressive breast cancer. After learning about the links between aluminum and breast cancer, she began experimenting with creating her own skincare products, which eventually led to the creation of SmartyPits. In just 21 months, SmartyPits grew from making under $100,000 in 2016 to over $500,000 by the end of Q3 in 2018.
Is it profitable? Yes
How much money it makes: $2.2M/year
SmartyPits is a fast-growing deodorant company that has gone from making under $100,000 in 2016 to making over $500,000 by Q3 2018, after the founder's experience as a breast cancer survivor led to developing an aluminum-free deodorant.
3. GoldFi ($144K/year)
Gil Marcondes, the founder of GoldFi, came up with the idea for his online jewelry business after struggling with the performance of his brick-and-mortar store. During the COVID-19 pandemic, he met a friend who encouraged him to invest in the pure online business model. Since launching on the Shopify platform, GoldFi has seen success, with an average revenue of $22K in the last three months and an 88% increase in sales from the previous month.
Is it profitable? Yes
How much money it makes: $144K/year
How much did it cost to start: $7K
GoldFi, an online jewelry business founded by Gil Marcondes, has received an average of 463 sessions per day in the last three months, generating an average revenue of $22K, and has seen sales growth quadruple in the last six months.
Learn more about starting a wholesale business:
Where to start?
-> How to start a wholesale business?
-> How much does it cost to start a wholesale business?
-> Pros and cons of a wholesale business
Need inspiration?
-> Other wholesale business success stories
-> Marketing ideas for a wholesale business
Other resources
How much can you make with a wholesale business?
With a wholesale business, you can make an average of $1.42M revenue per year (based on data reported by real businesses).
You can start with an initial investment as low as $100. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 24 months.
How much does a wholesale business make a week?
Based on our data, average weekly revenue for a wholesale business ranges around $29.6K. As such, you could see monthly revenues of $118K.
To know if your wholesale business achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.
Learning your weekly profit can also show whether you're hitting your target goal for your wholesale business.
How much do wholesale businesses owners make?
The income of a wholesale business owner can vary depending on various factors such as location, size, competition, and the owner's business skills.
But to give you some idea, the weekly revenue of an established wholesale business is about $29.6K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.
While the potential for earning a good income as a wholesale business owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.
Wholesale Business Profit Margins
Generally speaking, a wholesale business can expect profit margin of around 30%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a wholesale business, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.
However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, wholesale business owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, wholesale business owners can ensure long-term sustainability and profitability for their business.
Wholesale business owner salary
The salary of a wholesale business owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established wholesale business, in a prime position, might see an average weekly salary around the ballpark of $8.88K.
But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.
Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.
Conclusion
In a nutshell, a wholesale business is quite promising if you plan on starting such. With a market size of $8.4T, you can enjoy a potential revenue of around $1.42M per year with a gross margin of 30%.
Considering this information, you can enjoy a return of investment within 24 months, especially if you have a monthly profit of $35.5K. Overall, the success of your wholesale business also depends on your effort and knowledge about it. If you persevere with these things, you can ensure that this wholesale business is profitable.
Make sure you have a proper wholesale business plan and know how to get clients for your wholesale business.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
