The wholesale business product cycle is the timeline that takes place in the wholesale trade. The timeline includes the introduction of a product, its marketing, customer acceptance, peek in demand, followed by the closeout and liquidation stage. By understanding the product cycle a wholesaler or retailer can make better business decisions.
Stage #1
Wholesale products are initially introduced into the marketplace by manufacturers and importers. They manufacture, or import, a product which they feel there is demand for in the sector which they serve. For instance, an importer might observe the popularity of Ugg boots, and decide to introduce a similar boot to his retail clientele. There are two approaches, one where the item is a staple, such as socks, and therefore has a long term life time duration, or a niche item, such as a novelty item, which can sell fast but peak just as quickly.
Stage #2
The wholesale merchandise is marketed to prospective shops that serve an ideal customer base. If the new merchandise consists of elegant social jackets, then the marketing will be directed toward clothing stores that sell evening wear.
Stage #3
Customers start buying the items at the retail level and become repeat buyers. This allows the manufacturers and importers to continue investing in the recently introduced items.
Stage #4
The demand peeks and customers start purchasing the item at a much slower rate, to the point where the item starts appearing in the clearance racks.
Stage #5
The demand in regular retail chains has ceased, and now the item must be liquidated in the secondary markets as a closeout. When the product starts appearing in this category retailers should no longer order this item from their suppliers. On the other hand, they should buy the item from closeout dealers because they might have customers who still would like the item, or would be strongly motivated by its sale at a steeply discounted price.