Buying wholesale for the purpose of reselling is a business model as old as time. The method is still in use today because it's proven to be successful — when done right. This is true whether you have an e-commerce store, a brick-and-mortar store, or both.
One of the most important decisions retailers need to make is sourcing inventory. Finding suitable wholesale suppliers for your retail business doesn't have to be complicated. In this article, you'll find out the different types of wholesalers, the pros and cons of working with wholesale suppliers, and how to find suppliers for the products you need.
What Is a Wholesale Supplier?
A wholesale supplier is a middleman between manufacturers and retail stores. Wholesaling is a business-to-business method that involves buying products in large quantities from manufacturers and reselling them to other retailers. Wholesalers make money by buying at a lower price and reselling in smaller quantities with slightly higher prices. Although not common, wholesalers also buy goods and sell them to other wholesale suppliers.
Types of Wholesale Suppliers
To find the right wholesale vendor for your small business, you must understand your industry's distribution channels. For instance, some industries allow retailers to buy directly from manufacturers while others need you to deal with distributors. Read on to learn about the different types of wholesale vendors.
- Manufacturer: Manufacturers produce finished products in bulk from raw materials. Manufacturers work with distributors and wholesale suppliers to distribute their products to retailers. Some manufacturers also sell directly to retailers depending on the industry and the products being sold.
- Distributor: Distributors or importers are companies that acquired the sole right from manufacturers to distribute a product in a specific country or area. They sell directly to retailers or smaller local wholesalers. Distributors generally only stock non-competing products.
- Wholesaler: Wholesalers buy in bulk from a distributor or a manufacturer and resell at a wholesale price to a retailer. Some wholesalers only carry one type of product while some stock a wide range of merchandise for resale to retailers in different industries.
Pros and Cons of Buying From Wholesale Vendors
The biggest benefit of buying from wholesalers is that you can source your products for lower costs. This gives you a competitive advantage of lowering your prices to attract more customers or simply making more profit per item.
It sounds simple enough; however, if you factor in logistics, the industry you're in, and business practices, it can get complicated. Take a look at some of the pros and cons of buying from wholesale vendors.
- Consistent supply: Since wholesale suppliers buy goods in bulk, you can expect a reliable and consistent delivery of products.
- Get around minimum order quantities: Buying from wholesalers helps you get lower prices for your inventory without putting in minimum order requirements that can tie up your capital.
- Avoid Customs and shipping costs: Some products come from other countries and importing could be the only way to get your inventory. However, Customs fees and shipping costs might eat up most of your profit. Sourcing your stocks from wholesalers may be the best option for you to get inventory at lower costs.
- Quality control: Reliable wholesalers vet and check the quality of the products they buy so you can purchase products without worrying about their quality or doing a lot of quality checks yourself.
- Finding reliable wholesalers can be challenging: Although there are many wholesalers from which you can buy products, finding one that's reliable could be difficult. This means you might have to research, read reviews, and go through a trial-and-error process to find a reliable wholesaler for your small business.
- Some wholesalers may not sell to e-commerce retailers: If you conduct operations strictly as an online business, you might find it difficult to close deals with wholesalers. This is because some wholesale companies are hesitant to work with e-commerce businesses and prefer traditional brick-and-mortar stores.
How to Find the Right Wholesale Supplier
As a small business, you'll want to find wholesale suppliers that can source products you need for your store. You're also looking for reliable and trustworthy vendors with affordable prices that serve your geographic area. Here are some tips on how to find the best wholesale vendors in your industry.
1. Understand Your Industry's Distribution Channels
Each industry has different distribution channels that vary by region, country, and product. You'll also find that some wholesalers serve just one market while others cater to many industries. Knowing how the supply chain in your industry works will give you a better idea of where to start.
2. Do an Online Search
Find wholesale suppliers by searching on Google or major B2B marketplaces like Global Sources, Alibaba, BuyerZone, SaleHoo, and DHgate. Whether you're looking for wholesale clothing, brand names, or any kind of wholesale products, these marketplaces are a good place to start your search.
Alibaba and Global Sources are popular and reputable because they vet their suppliers. They also provide helpful information so you can evaluate each vendor.
When you're looking for vendors, read the reviews to see how easy they are to deal with and if there are any problems with the quality of their products. In general, you'd also want to know their minimum order requirements, pricing, and if they ship to your area.
3. Attend Trade Shows
Attending trade shows is a great way to connect and establish relationships with different manufacturers and suppliers. Trade shows allow you to meet with dozens of wholesalers or manufacturers in a single day. You can also see and sample products, which makes comparing suppliers easier. The face-to-face conversations you can have with suppliers can be refreshingly productive as you'll avoid the miscommunication and time-consuming back-and-forth chats that happen when contacting people online.
The Trade Show News Network is the largest directory of trade shows online. You can search for trade shows by industry, date, city, state, country, or event name. For the list of trade shows in the U.S. based on product category, you can search WholesaleCentral.com.
4. Network With Other Small Business Owners
Experienced business owners who understand your industry are the best sources of information about reliable wholesale suppliers. Take time to network and build connections to help you grow your business. Find industry groups and online forums to participate in — these are primarily on social media platforms so build your LinkedIn profile, as well.
5. Subscribe to Your Industry's Trade Publications
Check out some trade magazines in your industry. These are often overlooked but they contain a ton of information and a single issue can give you the names of numerous wholesalers or small manufacturers you can reach out to. You can also subscribe to online newsletters and blogs to keep up with news and trends in your industry.
If you don't know where to start, joining your local Chamber of Commerce is a great way to access resources and build professional connections. In addition, here are a few trade magazines and blogs you can check out:
- National Retail Federation
- Retail Minded
- Independent Retailer
- Women's Wear Daily
- Packaging Digest
Overseas vs. Domestic Suppliers
As you know, buying inventory within the U.S. could cost more in general. There are some advantages to this, such as:
- Local wholesalers will take care of the importing and warehousing. You don't have to deal with shipping costs, Customs fees, and storage space.
- Local wholesalers assume the risk if the products' quality is not up to par. It also means you don't need to perform extensive quality checks on your items.
To find wholesale vendors in your region, you can simply Google the company that manufactures the products you want to sell and ask or find out who their wholesale distributors are. You may also find some smaller manufacturing companies that will sell to you directly.
The costs and benefits of buying from local wholesalers or importing from overseas also depend on the products. Weigh which option works best for your profit margins and needs.
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Notice to the Reader
The content within this article is meant to be used as general guidelines and may not apply to your specific situation. Always do more research or consult with professionals to ensure that you're making the best decisions for your business.