Trade allows a business to acquire other products at the wholesale cost of their own products. This special purchasing power, achieved exclusively by trade exchange members, is often referred to as “trade leverage”. Making sales with built-in profits makes the cost of purchases more economical on trade.
Wholesale Buying Power
For example, if a company sells copy machines, jewelry, clothing or any other product that has a markup (a pricing structure in which the wholesale cost is half of the retail selling price), will be acquiring each trade dollar at the cash cost $.50.
When purchases are made using these trade dollars, the company, in this example, pays half price for everything that they buy on trade, allowing them to essentially buy wholesale.
Underutilized capacity, excess inventory, and retail margins also factor into the trade success scenario for service businesses. In the table below, the ideal levels of untapped resources are featured by industry.
Whether you are a product or service business, the opportunity to engage in trade to buy wholesale is available to you. To determine if your business is a good candidate for trade to buy wholesale, take this Trade Quiz.