How to Buy Wholesale – The Beginners Guide
When you’re just starting out, understanding the process of buying wholesale items for resale can be a daunting task. That’s especially true since the wholesale industry is often shrouded in secrecy, and many retailers go to great lengths to keep their wholesale suppliers a mystery.
In this post, we’ll break down the information you need to know, so you can quickly and confidently identify legitimate wholesale vendors and buy in bulk online.
- The Different Types of Wholesalers
- How to Buy Wholesale (Legally)
- How Do I Find Wholesale Suppliers?
- 6 Things to Consider Before You Buy Wholesale
- Questions to Ask Vendors Before You Buy Wholesale
- Types of Wholesalers to Avoid
- How to Reach out to Wholesalers Successfully
- Dos and Don’ts of Email Outreach
The Different Types of Wholesalers
There are a few subtle differences between the different types of wholesalers. It’s important to understand these differences in order to ensure you only buy wholesale from reliable, reputable vendors who aren’t competing with you for the same customers.
Manufacturers and producers are at the top of the pyramid, as they make and sell products to wholesalers.
Retail wholesalers bulk buy from manufacturers and their network of distributors. Like you, they benefit from the advantages of bulk buying.
Retail wholesalers then go on to resell to business owners with brick-and-mortar shops and/or online stores.
Merchant wholesalers buy wholesale products directly from manufacturers. However, instead of strictly retailing business to business, they use different sales and marketing channels to directly access the end consumer.
A rather notorious merchant wholesaler is Shein. They can be found vending on Alibaba, Ebay, Amazon, Poshmark, as well as their own retail website.
As you might imagine, this market monopoly makes it virtually impossible to match or beat them on retail price, even though you buy wholesale from them.
Merchant wholesalers can easily become a serious threat to your business as a competitor and, in the majority of cases, should be actively avoided.
How to Buy Wholesale (Legally)
Now you have an idea of all the major players involved, let’s dig into the how.
Common Retail Business Legal Requirements
There are so many moving parts to opening up a physical retail location, but some of the more confusing things can be how to make sure you stay on the right side of the law.
There are some steps you need to take to make your business official, and it’s worth noting that these can change from state to state and country to country. In this article, we’ll cover the basics, but the onus is on you to check out the specifics for your region.
There are four main types of business structure commonly used. When just starting out, most new retail business owners form a Limited Liability Corporation (LLC) or register a company.
A business license allows sole traders or companies to legally operate their business within a specific geographical jurisdiction.
Related Content: How To Register a Business in The USA
EIN stands for employer identification number, a number given to you by the Internal Revenue Service to identify taxpayers who need to file business tax returns. EINs are issued by the federal government.
Related Content: 4 Easy Ways to Apply for an Employer ID Number (EIN)
Sales Tax ID
This is commonly known as a TIN, or taxpayer identification number, which is an official number issued by the Internal Revenue Service of your country of residence. Your Social Security Administration may also be able to issue your sales tax ID.
If your business also has an online presence, it’s important to remember that, in some states, you also need to collect sales tax on shipping and handling. Sales taxes do differ from state to state.
Find your state sales tax rate here.
This permit is also referred to as a reseller’s license, reseller’s certificate, sales tax permit, or sales tax ID.
Your reseller’s permit allows you to buy in bulk online and in person, and is one of the first things to get. Reputable wholesale vendors will insist on you having a resale license because it’s a legal requirement.
In fact, be wary of vendors who allow you to bulk buy wholesale items without your reseller’s permit.
Related Content: How Do I Get a Seller’s Permit for Sales Taxes?
Limited Liability Insurance
Liability insurance covers any business or individual in case you’re sued for personal injury or malpractice.
Whether you have a brick-and-mortar store, online store, or both, it’s always wise to invest in limited liability insurance when retailing to the general public.
Related Content: The Best Business Liability Insurance Providers of 2020
Plan to sell trademarked products? Then you’ll also need to get a license that allows you to do so without infringing on intellectual property rights.
Your local Chamber of Commerce should be able to provide information on how to contact the appropriate offices for your state and county.
Related Content: Understanding License Agreements
How Do I Find Wholesale Suppliers?
Great question! There are a number of ways that you can go about locating suppliers to buy wholesale from, but let’s look at a few tried-and-tested options.
Wholesale directories are a great way to buy wholesale as you’re able to access a large number of wholesale suppliers within the same niche. It’s important to remember to still do your due diligence.
This is one of the best ways to find wholesale suppliers. If a friend or colleague has had a good experience they’re happy to share, that speaks volumes.
This is always a good place to start, but it’s important that you do a deep dive, as the best results are not always on the first few pages of the search results.
There are many groups on Facebook where you can connect with people who are bulk buying wholesale for resale. You can get some great deals, but it’s also a little risky.
There are a few established ecommerce forums where you can connect with other retail business owners. Wholesalers tend to hang out in forums for obvious reasons.
6 Things to Consider Before You Buy Wholesale
Budget and Inventory
Retail success is a combination of good product selection and knowing your numbers and profit margins.
When bulk buying wholesale, you need to think about your floor and shelf space, and how much inventory you need to make your shop feel suitably full and welcoming.
Be realistic about your budget, and don’t forget to factor in unforeseen expenses. Make sure you consider sales, discounts, and other promotions you may run, alongside items that simply just don’t sell well.
These factors will all affect your profit margins and need to be considered when deciding how much inventory to buy and your overall cash flow.
Finally, don’t forget to inquire about payment terms. Depending on how much inventory you’re purchasing, you may be able to negotiate better terms.
When looking from vendors to buy wholesale from, it’s important to select a company that is knowledgeable about its products and transparent about its practices.
Don’t be a pain in the butt, but don’t be afraid to ask questions about the products you’re considering buying in bulk.
Your wholesaler is essentially your business partner, and they should be willing and able to answer your questions sufficiently. If they’re not, consider that a serious red flag.
Unit Cost and Value for Money
You’re looking for a quality product at a reasonable price, so don’t be afraid to shop around as many wholesale vendors stock the same or similar products.
Be wary of prices that sound too good to be true, and always order samples before placing large purchase orders. Samples usually cost significantly more than wholesale units, but that upfront cost is definitely worth the risk of getting stuck with 100 pieces of a poorly made dress in a terrible fabric.
The modern consumer cares about the backstory of their products.
While you as the business owner are looking for good value for your money, it’s important to make sure you’re not engaging with companies that have shady or unethical business practices.
We’ve all been on the receiving end of companies who treat you well when they’re making the sale but then treat you like trash once they have your money. It’s no different when you’re buying wholesale.
Look for wholesale vendors who consistently demonstrate good customer service. Check out review websites and, if possible, speak with existing customers to find out how they find working with that vendor.
Ease of Transaction
Can you quickly and easily explain what you need and get it without excessive stress, cost, or friction?
This is especially important if you’re working with international vendors. It’s also important to remember that countries like China have lengthy holidays when business pretty much grinds to a halt for weeks at a time.
The responsibility is on you to ask questions and do your due diligence. That said, even with the best research in the world, every business owner will buy wholesale from a flaky or dishonest supplier at some point.
Give preference to companies that you’re able to get on the phone and have a conversation with should you have questions, a problem, or need help. This is especially important as your business grows.
Questions to Ask Vendors Before You Buy Wholesale
Once you’ve found a number of wholesale vendors you’re interested in working with, it’s smart to have a list of questions that will help you filter out the good from the bad vendors before you buy wholesale from them.
Take a look at the questions below and keep them on hand when contacting vendors either by phone or email. These questions will make sure you have the information you need to make an informed purchasing decision.
- Where are your products made or manufactured?
- What are your wholesale delivery lead times? As a retailer, quick turn around is important because an empty shelf space means missed revenue.
- What is your minimum order quantity (MOQ) for wholesale?
- How long has your company been operational?
- Do you sell products directly to the consumer?
- Is it possible to buy samples before I make a purchase order?
- What is your return policy for any damaged items within my order?
- Do you have a digital wholesale ordering system? This definitely helps to eliminate errors in your order and fulfillment delays.
- What happens if my order arrives late?
If you buy wholesale products online, it’s worth checking out the vendor’s FAQ page to see if any of those questions are answered already.
Related Content: How to Find Reviews of Wholesale Vendors
Types of Wholesalers to Avoid
Even after much research, it’s still possible to fall into business with a shady vendor. That’s why it’s helpful to point out a few red flags that you should definitely avoid.
- Don’t buy wholesale from merchant wholesalers (who will happily steal your customers)
- Don’t buy wholesale from suppliers who take great pictures but sell shoddy products (that’s why it’s important to buy samples)
- Don’t buy wholesale from suppliers who have too many bad reviews online (though be mindful that sometimes these are actually left by competitors)
- Don’t buy wholesale from vendors who treat you as less-than simply because you’re starting out (look for vendors who invest in the relationship from the beginning)
It’s also important to acknowledge that the wholesale market is a global industry. This means you can buy wholesale products online and in person from all over the world.
That being said, there are pros and cons to buying from both domestic and international suppliers.
Pros of Buying Wholesale From Domestic Vendors
- Easy communication because there’s no language barrier
- Due to high labor standards, overall product quality is usually better
- It’s far easier to check whether a wholesale supplier is legit
- Shorter delivery times and lower shipping costs
- Better legal protection and payment protection in the unfortunate event that you need it
Cons of Buying Wholesale From Domestic Vendors
- As manufacturing costs are higher, so are your wholesale prices
Pros of Buying Wholesale From Global Vendors
- Cheaper labor and manufacturing costs
- Larger selection of wholesale vendors to choose from –sites like Alibaba help make it easier to find and reach out to international wholesale suppliers
Cons of Buying Wholesale From Global Vendors
- Your product may be perceived as lower quality from your customer
- Lower labor and manufacturing standards
- Harder to do your due diligence
- Very few intellectual property rights unless you’re a major brand
- Lengthy shipping time and higher costs
- Language barrier can cause communication challenges
- Sizing may be different from your country of residence. Chinese made clothes tend to run smaller.
Sure, it can be significantly cheaper to buy wholesale from countries like India, China, or Turkey. It’s also incredibly easy because, with your reseller’s permit, you’re able to simply create wholesale accounts on the vendors website. You never even need to leave the comfort of your living room.
The problem with this is, unless you have boots on the ground doing quality assurance, you need to make peace with the fact that you might get a less-than-stellar shipment, and resolving any issues will be slower and harder.
How to Reach out to Wholesalers Successfully
The key to successfully bulk buying wholesale items for your business starts with outreach.
Get that wrong, and you’ll waste a lot of time and energy while getting little in return. Get it right, and you’re able to fast-track communication, buy wholesale, and, get your products delivered to you sooner.
It’s also worth noting that, in countries like India and China, things just tend to move a little bit slower, so it’s important to factor that into your lead times.
Luckily, if you’re buying bulk online, you’ll be able to simply open your account online and make your first order. But when you’re just starting out, think about going a step further. Send an email, get on the phone, and try and connect in person.
It’s easy to have a slick website, but in the long run, it’s important to build relationships with people who will be an integral part of your business.
Dos and Don’ts of Email Outreach
Successful email outreach is all about doing your research and having systems in place to organize the information you acquire.
Email Outreach Dos…
Where Possible, Find a Named Contact Within the Company
There are free and paid tools available that make it easier to find named email contacts within the U.S.
If you’re unable to locate a name, start by introducing yourself first.
Example: “Hi, it’s Michelle from (your company)”.
Pay Close Attention to Your Email Subject Line – it should be evident that it’s a business inquiry.
Sales teams look out for this type of email because they want to make sure they’re responding to potential customers and avoiding tire kickers.
It also helps to reach out from a business email address: (yourname)@(yourbusinessname).com
Keep Your Emails Short and Professional
We all make typos and grammatical errors, but in your outreach email, it helps to present yourself as professionally as possible. Keep your emails concise and informative, but to the point.
Try to avoid back and forth one-line emails if you can, as this is not the best use of anyone’s time.
Let Them Know You’ll Follow Up With Them
Quality vendors are inundated with inquiry emails each day. This means your first obstacle to overcome is to even get them to open your email. The next step is to get them to respond.
That’s why you should also let them know you will follow up in three to four days if you don’t hear from them. This demonstrates that you’re serious.
Email Outreach Don’ts
Avoid Lengthy Rambling Emails
Write concise emails that make it clear about who you are, what you want, and how they can help you. It’s much easier to respond to emails like this.
Don’t Ask For a Discount Too Soon
Resist the urge to ask for a discount. Focus on establishing a good relationship with your wholesaler, and show them that you’re likely to be a good (regular) customer.
Once you’re established and you’re making larger purchases more frequently, you’ll experience much more success when you broach the subject of shipping discounts, reduced prices, and split packs.
Don’t Forget to Follow Up
There’s something that’s really important to highlight: The success is in the follow-up.
You may reach out to 20 different wholesale vendors yet only receive a response from four of them.That’s why the follow-up email is so imperative.
Schedule in a reminder to follow up with any wholesale vendor who you haven’t heard back from within three to four days. Check out Boomerang, a free tool for scheduling follow-up emails and checking if your emails have actually been read.
As we wrap up our post on how to buy wholesale for your retail store the right way, there are a few final things to remember.
Firstly, it’s a process, and definitely worth taking the time and effort to do your research and shop around. This will help you get the best quality and the best prices.
Lastly, always try to have a backup wholesaler, especially for your bestsellers. Things go wrong, companies have holidays or sell out of certain lines, and you want to make sure you have a Plan B should that ever be the case. Otherwise, you can find yourself in a position where your supply chain can’t meet the demand.
Still have questions about how to buy wholesale for your retail or ecommerce store? Feel free to ask them in the comments.