One of the primary needs of retail and other service businesses is to find and build good relationships with wholesalers. Here’s a simple overview of what it means to buy wholesale.
The Mystery behind Wholesalers
In general, wholesalers are the intermediaries when it comes to supplying goods to companies for resale. They buy large quantities of items from various manufacturers or vendors, frequently warehouse them, and then make them available in smaller amounts to online and brick-and-mortar businesses.
Depending on whom you ask, there are several types of wholesalers. They include those who handle a wide variety of products to specialty wholesalers who carry a narrow range. Some wholesalers actually buy the products, house them, and then resell, while others like drop shippers take orders that they pass along to the producer who ships the order directly to the customer.
Think Quantity and Quality
According to this post from the Small Business Administration (SBA), buying wholesale is about volume. The more you buy, the lower your price. However, you don’t want to buy more than you can reasonably resell. Therefore, you need to find balance.
Chances are as a small business owner you won’t have a lot of wiggle room when it comes to negotiating with high-volume wholesalers. You just might want to talk directly to the manufacturer to see if you can work out a good deal. Otherwise, ask them about their recommendation for a good wholesaler.
Find the Right Wholesaler
If you’ve been lucky enough to negotiate with the manufacturer directly, you may not need this step. However, if you’re still looking for the right wholesaler here are some suggestions from the SBA:
- Conduct an online search. Start looking according to the products you need then narrow it down to local suppliers. Sources include YellowPages.com, online associations, trade directories, and wholesale directories such as Wholesale Central or Wholesale Network.
- Check out trade shows. If you can afford to attend, find a trade show where you can have access to a variety of companies.
- Look through trade magazines. It’s wise to keep up to date on the latest in your industry anyway. Now you have another reason to read trade magazines.
- Talk to those you know. Networking is always one of the best avenues for finding information about a topic. Check to see if your city has a Small Business Development service.
Making a Wholesale Agreement
Once you’ve found your supplier of choice, ask questions. You’ll want to know about and/or negotiate for:
- Volume discounts
- Minimum order quantities
- Return policies
- Damage and breakage
- Order processing time
- Pricing terms
- Delivery schedules
The SBA indicates there are currently 300,000 companies in the U.S. wholesale distribution industry. That means finding one is easy. Finding the right one and forming a good relationship takes time and effort.