Your sales are much like an iceberg. The most visible aspect is floating above the water – your actual sales revenue. Most wholesale distribution or importing businesses are quite focused on the sales they’re making, especially when they’re thinking about their improved sales growth and overall business growth.

But just as important is the other part of the iceberg resting silently underwater; your profit. Specifically, your profit margins.

This is the core foundation keeping your business above water. You can throw all your energy and effort behind sales, but if you don’t have your pricing right, you could be paddling furiously in vain just to stay buoyant.

Alternatively, by improving your profit margins, you can make more of the right sales and consistently smash through those icebergs.

Discover 5 smart ways to improve your profit margins, boost your business growth and smash the sales iceberg

Let’s have a look below the surface at some easy ways to increase your profit margin and create improved sales growth for your business:

1. Break it down: analyse your profit margins for each product

If you’re dealing with physical inventory, you’ll want to identify your exact profit for each and every product and product line. You then need to classify this profit margin by the customers you’re selling to, and, if you have multiple warehouses or stock locations, by the different shipping locations.

Be sure to arm yourself with the right business intelligence: accurate, real-time business data which easily shows not just your revenue, but also your actual profit.

2. Review your pricing methodology

Are you setting your prices by an industry standard, by what your competitors are charging or based on the total cost of the delivery for an item?

To find the best profit margin, it’s important to look at everything that goes into your costs.

This is where small business software such as a cloud ERP system can help. These bring together your business data from purchasing, inventory, sales, marketing, returns, and delivery information to give you business intelligence that’s easy to understand. By understanding your costs, you can understand your potential for profit.

If you’re also offering additional services which your competitors aren’t, such as free returns services or easy re-ordering tools on an eCommerce site, there is more opportunity to increase your profit margin. Ask yourself: is there an opportunity to increase your pricing without it bothering your customers? Will they see it as reasonable if you increase your pricing to justify your additional valued-added services?

3. Consider standard price increases

A lot of businesses are hesitant to increase their pricing due to competition alone, but the reality is that prices increase over time with pretty much anything that’s bought or sold.

If you’re an importer or wholesale distributor of products from overseas, you’ve probably seen price increases yourself in recent times due to the Aussie dollar exchange rate

The truth is, people expect price increases over time. As long as you’re providing a great customer experience and service they’ll want to come back for, standard price increases definitely aren’t out of the question as a way to boost your profit margins.

4. Fix your item receipting

One of the costs which can often be hidden from wholesale distribution businesses is the cost of incorrect orders you’ve received from manufacturers and suppliers.

Are your warehouse staff checking what’s been received against the relative purchase order?

You need strong inventory control systems to manage the full end-to-end procure to pay process. This can help you avoid the costs associated with missing and incorrect stock levels.

If you’re looking for further ways to reduce inventory and warehouse costs, also have a read of our blog How to Improve Warehouse Efficiency and Reduce Costs.

5. Discount without freezing

Discounting can often be the quickest way to reduce your profit margin– but not if you do it right.

Are you using a small business accounting system which lets you see your gross profit on each item? If not, this is a critical piece of information you need to know when considering whether or not to give discounts – whether it’s on an individual or ongoing basis.

With the right cloud ERP solution, you can also look at setting up bulk buy and quantity break pricing discount levels. These can be strategically applied once you’re seeing a good profit on larger quantities. And who knows, it may even give customers an incentive to buy in larger quantities – particularly if they can see their break prices on an easy to use eCommerce platform. For further tips on what to consider with an eCommerce platform, have a look at our article The Art of Growing Your eCommerce Sales.

Summary: improving sales growth with profit margins 

There’s a lot here to think about and we’ve only just scratched the tip of the iceberg on profit margins, but it all starts with having the right business intelligence. You need real-time reporting and easily digestible information such as sales dashboards and KPIs. These empower your wholesale distribution or importing business to make the right decisions.

If you have an all-in-one business software solution which brings together all your important business data from purchasing, inventory, receipting, sales, customers, eCommerce and more, you’ll have the tools you need to boost those profit margins and rev up your sales growth.

Still looking to dive in further? We’d love you to get in touch to start a conversation on how JCurve can help improve your sales growth and keep your profit margins looking healthy.