How to Buy Wholesale for Resale: Everything You Need to Know in 2022
Figuring out how to buy wholesale can be daunting.
I mean, can anyone buy from wholesalers? Do you need a license to purchase wholesale? Are there different types of wholesalers? Where can you buy wholesale products?
If that’s not enough, there’s so much information online and so many websites offering to help you buy wholesale products — and, unfortunately, not all of them are legitimate. So, what do you need to know to avoid making costly mistakes?
In this post, you’ll learn everything you need to know to quickly and confidently buy in bulk for resale.
- What Does It Mean to Buy Wholesale?
- 3 Types of Wholesalers
- Do I Need a Wholesale License to Buy Wholesale?
- What Do I Need to Buy Wholesale for Resale?
- Where to Buy Wholesale Products in 2022
- Domestic vs. Global Vendors
- How to Choose a Wholesaler for Your Business: 7 Essential Tips
- Questions to Ask Vendors Before You Buy Wholesale
- How to Buy Wholesale Clothing: 5 Top Tips
What Does It Mean to Buy Wholesale?
Buying wholesale is the process retailers use when they purchase products in bulk and resell these products individually. By buying in bulk, retailers can acquire products for a lower cost per unit and then sell them separately for more money in order to make a profit.
Here’s how buying wholesale typically fits into the big picture:
- Manufacturers will produce goods and then sell them in huge quantities to wholesalers.
- Wholesalers will sell the products in smaller bulk quantities to retailers.
- Retailers will sell the products individually to the end consumer.
For example, the apparel brand Feature buys products in bulk from brands like Nike, Converse, and Adidas, then resells the products individually to the end consumer.
Of course, it’s not always this straightforward. For instance, some retailers will buy wholesale products directly from manufacturers. On the other hand, some manufacturers and wholesalers will sell products directly to the end consumer.
There’re also brands like Apple, which act as manufacturers, wholesalers, and retailers. This is because they produce their own products, sell them in bulk to other retailers, as well as sell them as retailers to consumers.
To learn more, check out our comprehensive guide, Wholesale vs. Retail: Everything You Need to Know.
3 Types of Wholesalers
There are a few subtle differences between the different types of wholesalers. It’s important to understand these differences to ensure you only work with reliable wholesalers who’ll help you succeed.
There are 3 main types of wholesalers:
- Manufacturers sit near the start of the supply chain as they make the products they sell.
- Retail wholesalers bulk buy from manufacturers and their network of distributors. Like retailers, they benefit from the advantages of bulk buying. Retail wholesalers then go on to resell to retailers.
- Merchant wholesalers buy wholesale products directly from manufacturers. However, instead of strictly selling to other businesses, they also sell to the end consumer.
Now, if you’re just learning how to buy wholesale, you’re probably wondering: “Which type of wholesaler should I buy from?”
Here’s the takeaway: It’s best to buy wholesale products from manufacturers and retail wholesalers. In other words, it’s usually not a good idea to buy from merchant wholesalers who are also selling the same products to consumers — there’s no need to create competition for yourself.
Here’s a perfect example of this competition: Shein is a popular merchant wholesaler. They can be found selling in bulk and to consumers on Alibaba, eBay, Amazon, Poshmark, and its retail website.
As you might imagine, this makes it virtually impossible for retailers to match or beat the prices offered by merchant wholesalers like Shein. As a result, merchant wholesalers are often a serious competitive threat to your business and you should avoid them in the majority of cases.
How to Buy Wholesale Products in 2022
Now that we’ve covered the basics, let’s talk about how to buy wholesale for retail. First things first:
Do I Need a Wholesale License to Buy Wholesale?
Like most things in life, it depends. Here’s the gist:
- If you want to buy in bulk and sell individually, you need a license (and some other documents — more on this in a moment).
- If you’re interested in buying wholesale for personal use, you don’t need a license in the US. (You may still need a license in other countries, though.)
To put it another way, if you buy wholesale without a license and resell the products individually, you’ll be breaking the law in the US.
It’s worth noting that wholesale licenses are often referred to as a reseller’s license, a reseller’s permit, a reseller’s certificate, or a sales tax permit.
Each state has its own rules, so be sure to research the specifics for your region.
What Do I Need to Buy Wholesale for Resale?
Let’s take a look at how to legally buy wholesale for resale. Here are seven things you need to get started. (It’s worth noting that these requirements are different depending on the state or country you’re in.)
1. Form a Company
There are 5 types of business structures used in the US:
- Sole Proprietorships
- S Corporations
- Limited Liability Company (LLC)
The one you choose will largely depend on whichever is the most tax-efficient for your business. Although, many new retail business owners form a Limited Liability Corporation (LLC) when just starting out.
2. Get a Business License
A business license allows sole traders or companies to operate their business within a specific geographical jurisdiction. Check out the US Small Business Administration’s website to determine which licenses and permits you may need.
3. Get an EIN Number
‘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. The federal government issues EINs. You can apply for an EIN on the IRS’s website here.
4. Secure a Tax ID
If your business also has an online presence and ships products to customers in different states, you must collect sales tax on shipping and handling in those states. And remember, sales taxes differ from state to state.
To do this, you need a ‘TIN,’ or taxpayer-identification number, which is an official number issued by the Internal Revenue Service.
5. Obtain a Reseller’s License
As mentioned above, you must get a reseller’s license if you want to buy products in bulk and sell them individually.
The main benefit of this license is that it allows your business to avoid paying sales taxes on products that you buy wholesale products for resale. Individual states are responsible for issuing resellers’ permits.
6. Get Insurance
It’s a good idea to have insurance in the event that something goes wrong — especially if you’ve just started learning how to buy wholesale.
There are a few different types of insurance you may want to consider. For example, you may want to invest in limited liability insurance. You can also get commercial insurance to minimize other business risks. To learn more, check out Shopify’s guide, Commercial Insurance: What Is It, And Do You Need It For Your Ecommerce Store?
7. Check If You Need a Licensing Agreement
Do you plan to sell trademarked products? If so, you’ll also need to get a license to avoid infringing on intellectual property rights.
Your local Chamber of Commerce should be able to provide information on how to contact the appropriate offices in your state or country.
Where to Buy Wholesale Products in 2022
If you’re wondering where to buy wholesale products, this section’s for you! There are plenty of ways to find wholesale suppliers — let’s look at a few tried-and-tested options.
Here at Handshake, we only list handpicked, pre-vetted wholesale suppliers who offer a unique selection of products designed to make your store stand out from the crowd. Check it out for yourself.
2. Wholesale Marketplaces
Here’s a list of alternative wholesale shopping sites where you can buy wholesale products for resale:
- Alibaba is the largest business-to-business (B2B) online marketplace globally. As a result, it lists countless wholesalers, manufacturers, and distributors to choose from — most are located in China.
- IndiaMart is the largest B2B online wholesale market in India (and the second-largest globally after Alibaba). It has a massive database of wholesale suppliers to choose from, many of which are based in India.
- Global Sources is a wholesale market based in Hong Kong and the majority of suppliers listed are based in Asia.
- eWorldTrade is a US-based wholesale market that lists wholesale suppliers from around the world.
- EC21 is a wholesale marketplace based in South Korea, listing more than 1.5 million suppliers.
- TradeIndia is another popular wholesale market based in (you guessed it) India with more than 2,000 categories to browse.
- DHgate is another wholesale market based in China featuring millions of sellers in China, Turkey, and Korea.
- Made-In-China mainly helps to connect global buyers with suppliers in China.
To learn more, check out our full-length guide: 9 Online Wholesale Marketplaces to Grow Your Business.
Unlike Handshake, most online B2B marketplaces don’t pre-vet wholesale suppliers. Consequently, many suppliers listed on these platforms are scammers. So, do your due diligence before you invest any capital or resources.
Not only that, but many of these websites offer no way to checkout on the platform, so you have to contact suppliers and negotiate before you can buy wholesale products. This can be incredibly challenging to do successfully — even for experienced retailers.
Handshake keeps things simple by allowing you to buy wholesale products from pre-vetted suppliers directly on the website.
2. Word-of-Mouth Recommendations
Word-of-mouth is one of the best ways to find wholesale suppliers as they’ve already been pre-vetted by someone you trust. Ask your connections for their recommendations and listen for repeated names in your network.
3. Ecommerce Forums
What if you’re new to buying wholesale and you don’t know anyone in the space personally? Don’t worry, there are plenty of established ecommerce forums where you can connect with other retail business owners. Plus, wholesalers also tend to hang out in forums hoping to pick up new business. To get started, check out Shopify’s online community.
4. Facebook Groups
Similarly, there are many Facebook groups where you can connect with people who are bulk buying wholesale for resale. Again, you can get some great deals, but it’s also a little risky — so thoroughly research suppliers to ensure they’re legitimate before handing over your hard earned money.
5. Google Search
If you’re still struggling to find a wholesale supplier, you can always search on Google. However, 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. And again, thoroughly vet the suppliers you find.
Domestic vs. Global Vendors
Should you purchase wholesale products domestically or from global vendors? This is one of the critical questions you’ll need to answer when figuring out how to buy wholesale products for resale.
Your choice will impact virtually every aspect of your business in some way, so it pays to understand the pros and cons of each option. Let’s take a closer look.
Pros of Buying Wholesale From Domestic Vendors
- It’s easy to communicate because there’s no language barrier or crazy time zones.
- Due to high labor standards, overall product quality is usually better.
- It’s far easier to check whether a wholesale supplier is legitimate.
- You’ll experience faster delivery times and lower shipping costs.
- There’s better legal protection and payment protection.
Cons of Buying Wholesale From Domestic Vendors
- The cost of goods is typically higher for one of two reasons:
- The manufacturing took place domestically, so higher labor costs will typically result in higher prices.
- A retail wholesaler has spent money importing the products from abroad, so the price will need to cover those additional costs for the wholesaler to make a profit.
Pros of Buying Wholesale From Global Vendors
- Cheaper labor and manufacturing costs typically result in lower prices.
- There’s a more extensive selection of wholesale vendors and products to choose from — for example, Alibaba alone lists hundreds of millions of products in more than 190 countries and regions.
Cons of Buying Wholesale From Global Vendors
- Customers may perceive your products to be of lower quality than domestically produced ones.
- Lower labor and manufacturing standards — often resulting in unfair and unethical working conditions for people abroad.
- It’s more challenging to do your due diligence effectively.
- There are very few intellectual property rights — resulting in a sea of counterfeit goods.
- Lengthy shipping times and higher costs, in general.
- The language and time barrier can create communication challenges.
Should You Source Products Domestically or From Abroad?
When you first start learning how to buy wholesale, it can be tempting to source products from abroad for one key reason: It can be significantly cheaper to buy wholesale from countries like India, China, or Turkey than in the West.
However, unless you have boots on the ground managing quality assurance, you’ll need to make peace with the fact that you might get a less-than-stellar shipment. Plus, resolving any issues will typically be more challenging than with a domestic supplier.
What’s more, you’ll have to manage the costly (and confusing) international shipping logistics and customs process to ship products to your country.
Here’s the bottom line:
- If you already know how to buy wholesale and have some first-hand experience, it may be worth taking the plunge and sourcing products from abroad.
- If you’re still learning how to buy wholesale, it’s best to avoid the hassle, expense, and risks associated with buying wholesale from abroad. Instead, it may be best to source products domestically until you gain more knowledge, experience, and capital.
Thankfully, Handshake exclusively lists suppliers from the US — you can even filter by state.
How to Choose a Wholesaler for Your Business: 7 Essential Tips
Choosing the right wholesale supplier for your business isn’t the most straightforward task. So, let’s talk about a few things to keep in mind when considering which wholesalers to purchase from.
1. Make Sure the Company Is Legitimate and Trustworthy
When looking for vendors to buy wholesale from, it’s important to select a legitimate company that’s transparent about its practices. It’s also crucial to avoid engaging with companies that have shady or unethical business practices.
So, don’t be afraid to ask questions about the company and its processes. Your wholesaler is essentially your business partner, and they should be willing and able to answer your questions sufficiently. If they’re not, that’s a serious red flag.
It can help to choose companies that you can talk with on the phone whenever you have questions, encounter a problem, or need help. This is especially important as your business grows.
Again, Handshake reduces this risk and hassle by only listing trustworthy, pre-vetted companies.
2. Consider Customer Service
Look for wholesale vendors who consistently demonstrate good customer service. Check out review websites, ask for references, and, if possible, speak with existing customers and ask about their experience.
3. Shop Around
Don’t be afraid to shop around, as many wholesale vendors stock the same or similar products at different prices.
Still, be wary of prices that sound too good to be true, and always order samples before placing large orders. Samples usually cost significantly more than wholesale units, but the upfront cost is definitely worth it. (Getting stuck with 300 malfunctioned watches isn’t fun…)
4. Choose Suppliers Who Are Experts
Any wholesale supplier you choose should have a deep understanding of their products and niche. They should also be able to pass this knowledge on to help you market the products.
The truth of the matter is that, when you succeed, they succeed. As a result, good suppliers are invested in your business success.
5. Ask About Lead Times
This is especially important if you’re working with international vendors. It’s also important to note that other countries and cultures may have some lengthy holidays when business pretty much grinds to a halt for weeks at a time.
6. Consider The Ordering Process
Ideally, you should be able to buy in bulk online for your business like you would with a personal purchase. Sadly, this is rarely the case with B2B transactions. In fact, many wholesale suppliers have cumbersome and challenging payment processes.
This is another reason why it makes sense to use Handshake — after signing up, you can simply checkout online like you usually do.
7. Plan Your Budget and Inventory
Be realistic about your budget, and don’t forget to factor in unforeseen expenses.
For example, when you calculate your pricing, consider sales, discounts, and other promotions you may run. And consider that not every product will sell well.
These factors will affect your profit margins — so make sure to consider them when you make a decision about how much inventory to keep.
Questions to Ask Vendors Before You Buy Wholesale
Once you’ve shortlisted several wholesale vendors you’re interested in working with, it’s time to reach out to learn more about them.
Take a look at the questions below and keep them on hand when you do your research. These questions can help you gather the information you need to make an informed decision.
- Where are your products made or manufactured?
- What are your wholesale delivery lead times? (As a retailer, quick turnaround is essential because running out of stock 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 consumers?
- Can I buy samples before I make a purchase?
- What is your return policy for any damaged items within an order?
- Do you have a digital wholesale ordering system, or will I need to place an order on the phone, by email, etc.? (These systems help eliminate order errors, fulfillment delays, etc.)
- What happens if my order arrives late?
Some vendors will have already answered many of these questions on their website’s FAQ page.
How to Buy Wholesale Clothing: 5 Top Tips
If you’re wondering how to buy wholesale clothing for resale, the process is much the same as any other type of product. But for good measure, here are some specific pointers to bear in mind:
- It’s worth remembering that, when you buy wholesale clothes, the sizing may differ in your country of residence. For example, clothes made in China tend to run smaller than in the West.
- Unlike many products, clothing is seasonal. So, plan your purchases ahead of time so you have the right stock for the season.
- Similarly, unlike many products, clothes come in different sizes and colors. So, you’ll need to stock many product variables — and when buying wholesale clothing, this can add up fast. Here’s a pro tip: start with a small order and increase your order size slowly to avoid buying stock that doesn’t sell.
- Wondering where to buy wholesale clothing for a boutique? Aside from the wholesale marketplaces listed above, you can also purchase clothing in bulk from specialist wholesale clothing websites like Alanic, Bloom Wholesale, CC Wholesale Clothing, and MX Wholesale. Check out our complete list of wholesale clothing vendors here.
- You can also purchase wholesale clothing in person by visiting your region’s fashion district. This is easier to do if you live near a large city. For example, Los Angeles and New York have huge fashion districts with hundreds of wholesale clothing suppliers.
To start buying wholesale clothes online, check out our curated list of 25 incredible wholesale clothing vendors.
Final Thoughts on How to Buy Wholesale Products
Learning how to buy wholesale for resale can be challenging. But with a little tenacity and patience, it’s possible to find a reliable supplier offering profitable products for your business.
Remember, unless you plan to buy wholesale for personal use, you must obtain the proper licenses to buy in bulk for resale.
And it’s definitely worth taking the time and effort to do your research and shop around. This will help you get the best quality products at the best prices.
Do you have any questions about how to buy wholesale for resale? Let us know in the comments below!