Establishing a solid foundation for your wholesale plan is essential in today’s rapidly changing industry. A solid foundation will allow you to adapt quickly as markets, circumstances and demand change.

How you manage certain costs and buy the car will ultimately determine how much profit you get from each deal. These best practices will help you develop a wholesale strategy that is profitable from the start.

1. Cost-effectiveness is key

The key to a successful wholesale strategy is to ensure that you have these four costs under your control.

• Cost for the vehicle – You can easily lose margins if you overpay upfront. Do not accept an unfair price. Make sure you are paying fair market value.
• Transportation Costs – Don’t let transport be a limitation. Expand your horizons instead when you are sourcing. You may pay less for an automobile outside your immediate market due to less competition. Although you’ll have to pay for transportation, you can still save money in the end.
• Reconditioning Costs – Unexpected recon can be expensive. You should shop at a store that provides full transparency about the condition of a car up front. To avoid unpleasant surprises, make sure you know exactly what you are getting prior to buying.
• Recognize domino effects – When preserving margins, keep in mind that these costs are relative to one another. Spending less on your vehicle can give you more flexibility for transportation costs. Paying reduced fees may make it easier for you to cover recon costs. Savings will protect your margins over time.

2. Know your audience

After identifying these costs, the next important step to achieving profitability is to understand your lot and your market.

Pay attention to the questions that customers ask when they visit your lot. Do they ask about certain vehicles? You need to know what is in demand so you can buy the right vehicles for your customers.

Zoom out to a larger scale and assess the situation. Check out what cars are on sale in your area that are similar to the one you have to see if they are priced reasonably.

3. Shop with a reliable source

You should only buy from trusted sources to reduce the risk of your purchase.

What features can you expect from the source of your inventory? You should have 360-degree interior and exterior views as well as audio and video engine tags. Also, make sure that you can access condition reports and 360-degree interior and exterior views. We have all of these features, and more.

4. Every minute counts

How much time per week do you spend sourcing cars? You probably spend more time than you would like. You could do so much more with your time. You’re not alone in this dilemma.

Dealers spend on average over 40 hours per week planning and researching a purchase. This is a lot of time just to do sourcing.

In our industry, time is the margin. You can use the time you waste on sourcing to grow your business. We are accelerates your sourcing process by offering optimized vehicle recommendations based on past purchases.

5. Stay informed and flexible

The market is constantly changing. We must adapt to it. You will be prepared for the future with a flexible mindset that incorporates knowledge from both the past and the present.

We must learn from past failures and successes. Don’t change your strategy because you had a huge win or setback. If you overreact to the peaks or valleys, your results will be more inconsistent. Focus on the median instead.

Statistics are a better way to predict the future than a crystal-ball. The historical MMR can be a good indicator of the direction that the market will take. You can get a good idea of the direction that a vehicle will be trending by looking at its 60-day, 6-month and 3-month prices.