Retailers often acquire their inventory through bulk buying or buying wholesale online. These include wholesale clothing, accessories, undergarments, shoes, and even textile. Buying wholesale online is an essential part of being a reseller as it allows you to make a profit without having to worry about depreciating assets.
But why do retailers bother with buying wholesale online when they can get directly from manufacturers at a much lower and cheaper price?
It’s all about maximizing profits and buying wholesale online just happens to be more effective than buying from manufacturers. Wholesale products, by default, are inexpensive but are in continual demand – meaning as long as you have them in stock, you’ll never have to worry about not being able to sell them.
Whereas buying from the manufacturer, you’re just getting the clothes at a much lower price but the quantity is lower than that of buying wholesale. In a way, you spend more in wholesale but you’re getting more products in the end.
But before you log on to your laptop and buy a bunch of clothes in wholesale, there are the 10 things you need to do before buying wholesale for reselling.
What are those 10 things?
Get the necessary documents and licenses in order
Some states will require you to get a tax ID and license before you can start to resell wholesale products. This is because wholesale products are not yet taxed and before you start looking for the best deal, try to get the following so you avoid the legal problems:
- A federal employee ID number from the IRS – you can find the application on their IRS.gov website. You can get this permit as a sole proprietor of a business.
- Get a federal and state tax ID number applicable to your residence – Get the federal ID first because it may be a requirement for the state tax ID. Go online to find your state’s Department of Revenue and they’ll be able to redirect you to the right department.
- Once that’s done, apply for a vendor’s license.
Decide how much you want to buy
Wholesale is reliant on one thing – VOLUME. Volume is important because the more you buy in volume, the lower the unit price. Wholesale business is often dubbed as being “volume-centric” because of this very nature.
In reselling, you need to balance your supply and fiscal needs with your inventory constraints. In other words, it’s great that you just bought 5000 pieces of clothing – but where are you going to put them while the orders have not yet come?
Find and research wholesale suppliers
Not every wholesale supplier provides you with the same perks or bonuses. In fact, no two suppliers are the same. It’s important that you do your research first in finding the perfect wholesale supplier that will meet your needs.
You can use the Internet, classifieds, online associations, and even wholesale directories as your starting point. You can also find them in wholesale trade shows. Trade shows may require you to do some travelling but the payoff is worth it with the networking and repositories of awesome bargains and deals.
You can also ask the brand manufacturers themselves if they have accredited wholesalers. If they won’t sell t you directly – normally, they usually sell at higher volumes – you can ask for referrals.
Use and build a network
Part of your research into finding the best wholesale suppliers will take you into a network of people who have dealt successfully with wholesale products and have grown their list of contacts for the industry.
Talking to these people will give way to a boatload of information as they share with you their associates’ information. Sometimes, all you need to do is ask them politely. Who knows? You might even be included in their network in the near future.
Try joining professional groups that offer wholesale prices
Your network should also be composed of groups that offer wholesale prices and you can find these groups in industry publications. They could also be affiliated with any of the manufacturers.
Joining these organizations is like joining an exclusive club. You get to enjoy discounts and other perks that you can’t enjoy when working alone.
Purchase wholesale lists at your own risk
Wholesale lists are exactly as they sound – a list of suppliers and distributors that you can use – for a price. The lists sound nice, but they are often outdated and old. If possible, try to generate your own leads first before spending a cent on other people’s leads.
Start with sample units
Rather than going big, try to go for smaller samples first to test the waters. When I say test the waters, I mean testing how the products will fare in your market and how the wholesaler will treat you. Think of it as a soft opening. This will allow you to get an idea on how things will run from your end and it’s easy to identify the strengths and weaknesses of your current business model with a sample unit.
Ask for perks
More often than not, your wholesale suppliers will always have something for their customers – including you. Perks are the reasons why you probably signed the deal with them in the first place and in this business, wholesale suppliers cannot afford to not go to business without perks. Try to ask for a cheaper price when you purchase more than the required volume.
One wholesaler will probably compete with another wholesaler just to encourage you that their business is the best when it comes to buying wholesale online.
Pay close attention to how you handle your item’s shipping
Freight is another factor that comes into play when you’re buying wholesale online – specifically the movement of your inventory from the wholesale store to your own store. This time, try to find reliable forwarders or freighters that you can sign a deal with so you’re guaranteed that the items will be shipped and handled with care.
Try to settle your store policies and due diligence before finalizing any order
Buying wholesale online also requires you to take care of things on your end – specifically dealing with the return policy, maximizing discounts, and streamlining the processing time. Lastly, don’t be afraid to negotiate the pricing terms especially if you know of a better deal to buying wholesale online.
For huge orders amounting to more than $20,000, try to consult a lawyer before signing the contract with the supplier.