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How to Buy Wholesale for Your Retail Business

Laurie Tardif
Colleagues discussing business

Buying wholesale products and selling them at retail prices can be the foundation of a solid business model. The concept is simple - a product is purchased at a low price and resold at a higher price. However, there is much more to becoming a successful retailer than just buying low and selling high - primarily determining what to sell, where to buy it, and how to resell it at a profit.

Deciding What to Sell Retail

Choosing the right products to offer is one of the most fun parts about a retail company. More important, the right product can determine business success. Some retailers focus on products related to personal passions such as sports or social causes. Others simply follow the trend- what's hot today becomes a product for sale tomorrow. Still others identify a market need, such as dishwasher-safe baby gear, and build a portfolio based on the niche.

Before making any sizeable investment, it is key to determine that the products can be purchased at a low cost, and that there is adequate demand so the items can be sold at a profitable price.

Wholesale Products That Sell Well

When looking for products to invest in, it's important to research what other sellers are having success with. Niche products are strong sellers using online methods because you can target a specific market interested in that product effectively with social media and other web marketing tools. Some of the most popular products to buy and resell for profit are:

  • Food products that promote health benefits and portability
  • Eco-friendly food wraps, containers, culinary supplies and even feminine products
  • CBD oil products (though this may come with legal concerns depending on where you live and sell)
  • Specialty clothing like unusual socks, outdoor weather gear and fandom-related wear
  • Speciality food products such as rare teas, unique coffees and craft beers
  • Smartphone and accessories
  • Pet products such as food, clothing, toys and specialty gear

How to Find Wholesale Suppliers

No matter the product, a key to successful retailing is in selecting the best source for purchasing the product at a low cost with minimal headaches. This step takes a great deal of legwork and research, with thousands of distributors and warehouse operations competing for business. Finding the best vendor to use to buy in bulk for resale is critical to your business success.

Online shopping

Online Wholesalers

By far, the most popular way that new retailers procure products for resale is through online wholesalers. The largest comprehensive source of global suppliers is Alibaba.com, providing large quantity or 'bulk' purchasing from vendors around the world. In addition, thousands of manufacturers are listed with directories that give retailers a range of choices in wholesale distributors.

Reputable directories include:

  • Wholesale Central: This directory lists a variety of wholesale companies and is free to access.
  • DOBA: This company's easy user interface allows a retailer to select a diverse array of products from multiple vendors from its website. Start with a free trial, then pay a monthly subscription fee.
  • SaleHoo: For an annual fee (less than $100), retailers access a directory of more than 8,000 pre-screened drop shipping and bulk-purchase suppliers. New customers can kick the tires first with a 60-day money-back guarantee.
  • Worldwide Brands: This site offers a directory of over 1,000 bulk distributors and drop shippers. The lifetime membership fee is $299.

Before making an investment in any directory, ask these questions:

  • Is there a fee to join the wholesale club or website?
  • What purchase quantity is needed to get a good price?
  • Can a retailer easily communicate with the supplier?
  • Are there any complaints about the wholesaler?
  • Will the company ship directly to a customer (drop-ship), or must shipping be arranged separately?

Answering those questions can help you select the right wholesale company.

Alternative Sources of Wholesale Items

Products don't have to be limited to those available from online wholesalers. Alternate places to find low-cost goods that can be sold at a profit include items made by local artisans or crafters, products sold at factory stores next to a manufacturing facility, and overstock or closeout sales at the local big box store. The key is making sure that the product can be sold at a profit, even after accounting for shipping and handling.

Selling the Products

Once the products and sources have been selected, it's time to tell the world about it, get products into customer hands, get paid, and provide excellent service after the sale. This will involve a marketing and logistics plan including:

Successful selling mix
  • Leveraging new media channels such as social media, banner ads on websites, and online classified ads.
  • Using third party sales platforms such as eBay and Amazon.com.
  • Building your own unique online store that not only promotes the product but also provides a secure way for customers to purchase.
  • Finding local venues for product sales such as brick-and-mortar stores, at local fairs, through ads on Craigslist, or via Facebook Marketplace or yard sale sites.
  • Determining your shipping process such as hiring a fulfillment service like Amazon.com or outsourcing to a third party logistics provider.
  • Setting up a merchant account to accept payments. Using PayPal or other accessible secure gateways can be easy ways to accept payments either online or in person.
  • Have a process in place for product support, such as a customer service call center to handle routine problems quickly and affordably.

Business Basics First

Prior to making the first sale, a new retailer will need to have a number of state, federal and legal mechanisms in place. A comprehensive new business overview can be helpful in assuring that important items aren't missed. In particular, the new enterprise should have a firm grasp on:

Careful planning can avoid many pitfalls later. Business owners may wish to consider engaging a coach to ensure accountability and help cement success.

Is a Tax ID Necessary?

In addition to a federal tax ID as a requirement if your tax entity is anything other than a sole proprietorship, you will most likely need a sales tax ID. Every state has different requirements but most do require you to file paperwork to get a state tax ID so that sales taxes on the goods you sell can be collected. The states that do not require a sales tax ID currently are Alaska, Delaware, Montana, New Hampshire and Oregon.

Resale Certificates

A resale certificate isn't necessarily required to buy wholesale and sell the goods but many wholesalers will require it, or ask for proof of a sales tax ID. Others will not accept it and will require you to pay tax upfront. The benefit of having a resale certificate is that you can buy the goods tax free for those vendors that allow them. The process to get a resale certificate differs state by state and you must have a sales tax ID in order to get one, unless your state does not collect sales tax. You do not necessarily have to have a sales tax ID in the state that you are applying for a resale certificate though. Only 10 states currently require you to have an in-state tax ID in order to get a resale certificate: Alabama, California, Florida, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Washington and Washington D.C.

Benefits of a Wholesale-to-Retail Business

Buying wholesale and selling retail can be a fun yet challenging way to make money. Good planning, strategic sourcing and smart marketing are critical to the business' success or failure. There are plenty of resources that allow a spirited entrepreneur the potential for success, limited only by the type and number of products to be sold combined with enthusiasm for marketing and providing excellent customer service.

How to Buy Wholesale for Your Retail Business