Running a successful retail business depends greatly on offering the right products at the right time, at the right price. So it is no surprise that for small retail businesses, figuring out where buying wholesale products for resale at a competitive price becomes a common worry.
It is a fact that a lot of retailers do not manufacture their products. A large number of retailers get their merchandise from wholesalers who act as distributors for most manufacturing companies. These wholesalers not only serve as a great source of supply, but as your business grows and evolves, they are flexible enough to support you along the way.
We understand that starting a retail business can seem a little overwhelming at first, especially when you need to sort out your suppliers, which is why we are sharing everything you need to know about buying wholesale products.
Wholesale buying occurs when retail businesses buy discounted products in bulk from suppliers/wholesalers and sell them at relatively higher prices to individual customers of their business. Wholesalers are a fundamental part of this supply chain, as they help manufacturers find customers without dealing with individual buyers.
There are several ways to find a wholesaler. Going through your local chamber of commerce is often a good place to start. Also, networking to meet fellow industry professionals who have been in the industry and working exceptionally well is another great place to start. You can attend events and trade shows where manufacturers, retailers, and wholesalers gather to share industry trends and intelligence.
If you are in touch with other business owners, you can leverage this network to get info on which wholesalers you should look into and which ones you should avoid. If you are looking into manufacturers overseas, Aliexpress is a popular online marketplace with thousands of wholesalers, retailers, and manufacturers. There are also plenty of manufacturers who seek out wholesale distributors or platforms that can simplify the buying process.
Now, we look at some of the benefits you can get from wholesaling to retailers your products. These benefits include:
When you buy products from established wholesalers, you lower your costs and all related expenses. Larger orders also reduce the cost of frequent shipments, so with bulk buying, you do not have to ship frequently. Also, there is an added advantage of getting lower-cost the more quantity of goods you add to your orders. You get more discounts on bigger order sizes.
Having access to a network of wholesalers give you a bigger product pool to choose your products. Dealing in wholesale, you can expand your horizons to step out of the local market and enter the global market with even better rates.
Buying Wholesale allows you to scale up your business and enjoy the perks that come with economies of scale and growth. In a nutshell, wholesaling will enable you to experience growth faster than before.
Once you have compiled a list of wholesalers you are interested in, Google them, read online reviews, ask about them from other retailers who have previously worked with them. Doing these will give you a good sense of whether or not they are worth reaching out to these wholesalers. It is one thing to find a wholesaler and another to work with them. Once you have found a few reliable ones, assess them to know if they are a potential business partner who understands your business requirements and is willing to work with you. If you have never worked with a wholesaler before, then use the following tips to choose the ideal one:
Depending on the niche you want to serve, you need to choose a wholesaler who can distribute what you need. You can work with as many different wholesalers as you need to to get the inventory you want. However, if you are selling a wide range of items, make sure they align with the wholesaler so that your brand is consistent.
How much money you spend on buying the merchandise from the wholesaler will determine the profit your business is going to make. Make sure you can get the best pricing that allows you to reach your profit goals.
Working with people you can not rely on only gives you a headache down the line. It is necessary to only work with businesses or people who are reliable in the industry. Wholesalers who deliver merchandise late, not at all, or consistently show up with damaged goods are not what you need for business. Your wholesaler should be able to supply the merchandise on time and be consistent.
Your wholesale partner should have a strong understanding of the products they sell. Not only can you share that information with your customers, but it also gives you the chance to make sure you know you have a partner who stands by the quality and performance of what they are selling. Wholesalers who can not answer your questions about their product may be aware their merchandise is not the best, or a lack of knowledge may mean they do not care. Either way, a good business partner will be able to answer your questions adequately.
When it comes to entering deals with manufacturers/wholesalers, there are some standards you are required to check, and some of these standards include:
The amount retailers pay to a wholesaler or distributor is known as the wholesale price. Wholesalers that sell to retailers do not have a fixed price on goods. The prices on orders are dependent on the quantity you buy. When you buy more, you get better rates than those that do buy less. While low prices are important, make sure to check the MOA (Minimum order Amount) the wholesaler set. If the MOA is higher than your working capital, the lower price is useless. So, it is necessary to find a wholesaler that demands a reasonable MOA with a good price.
Because most wholesale transactions require a large sum of money, you must investigate the reputation of your wholesaler and determine whether they are trustworthy or not.
a. Check Business license: Only deal with businesses with established business licenses.
b. Conduct Factory Audits: If you are peculiar about perfection, you should tell your supplier or wholesaler that you would like to have their factory audited before the purchase order is issued. Doing this helps to minimize product flaws when you are placing a customized order.
c. Conduct background checks: Be sure to authenticate the information you gather related to the wholesalers.
The shipping process is in three different stages. These stages include:
a. Local shipping from the wholesaler’s factory to the nearest airport, train station, or port.
b. Local shipping from the train station, port, or airport to your company headquarters (Door Step).
c. International shipping from the seller’s country to your country of residence.
Extensive research online can help you find the best options for each of these stages. Once you do, you can go ahead with that delivery option to minimize costs. Another better way for your product delivery is to use express shipping services. DHL and UPS provide express shipping services and deliver products straight from the wholesaler to your warehouse location. Being the buyer, you will have to pay for these services.
If you sell products online, it will be worth asking if your wholesalers can help you dropship. Dropshipping is a fulfillment method where the wholesaler stores your inventory and handles your shipping. Though, most small businesses confuse wholesale purchases for dropshipping. The difference wholesale purchases have from dropshipping is that wholesale purchases require all retailers to hold stock on hand before making and finishing a sale. When it comes to dropping shipping, retailers have to store or see the products they are about to sell in the open market. Instead, customers place an order with the retailer. The retailer gives that order to their supplier, who directly ships that product to the customer. This method saves retailers from holding the product or worrying about storing it. However, dropshipping comes with a fair set of problems as well. To begin with, your wholesalers that sell to retailers are directly in charge of shipping orders and meeting customer demands. If the supplier/wholesalers for resale drop the ball, it would eventually eliminate your customer base. Additionally, the profit margins are generally smaller, and you do not get to make much from the sale.
The time it takes sellers to source products and prepares for timely delivery is known as lead time. As soon as the buyer pays for the order, the lead time starts counting. Wholesalers that provide better lead times are bound to get higher satisfaction from retailers.
Delivery time is the time it will take a wholesaler to deliver the product to a retailer. Both lead time and delivery time come together to form the total time it takes for your order to be prepared and delivered to you. Retailers or buyers should determine their order and the quantity they place based on the lead time, delivery time, and the combined total time.
These are just some of the factors you should consider when finalizing a wholesaler for your retail business. Do prioritize financial security, and do perform your due diligence before falling for the first best offer.
Figuring out how to buy inventory wholesale is a necessary step in increasing your profits and upscaling. That is why it is better to take the time to do the math to make sure you are buying and selling stocks at prices that will work for you and your business.
You can use your POS System to help you with data. Work with wholesalers who sell high-quality products, are reliable and can support your growth. By asking the right questions and having the numbers figured out, you will be well on your way to making smarter decisions to grow your business.