What is Wholesale?

Merchandisers and retailers know that wholesale products are the only way to go. Wholesale products are products available at the price that big retailers pay. Big retail outfits do not pay the same price for their products that they sell those products for. How would they make money if they sold their merchandise for the price they paid for it? Usually by buying in bulk, big retailers get their products at wholesale. What does wholesale mean, really? It means buying products cheaply, much more cheaply than at retail prices.

Can Anyone Buy Wholesale?

The best part about wholesale products is that just about anybody can buy them. Usually, you don’t even have to be a big retailer to buy wholesale merchandise. With summer fast approaching, sunglasses are becoming a hot commodity. The sun may be out all the time, but only when summer rolls around do people consider buying new sunglasses. Smart retailers are cashing in and stocking up huge displays of sunglasses, offering a siren song to those who don’t want the sun in their eyes. And, best of all, these smart retailers are making money by purchasing sunglasses at wholesale prices.

You don’t have to be a known and established retailer to buy products like sunglasses at wholesale prices. Anyone can buy wholesale if they can find what they’re looking for at wholesale prices, and if they buy in bulk. Buying in bulk helps you to buy at those wholesale prices. And you can mark the price up to whatever price you think people will pay, returning a profit on every pair of sunglasses sold.

Where Can You Find Wholesale Sunglasses?

The great thing about wholesale products is that a lot of companies offer them. Do a little shopping around on the Internet, or even look up wholesale suppliers in the phone book. With a little wheeling and dealing, you can get the best price on wholesale sunglasses. Wholesale products are very affordable and bring you a nice profit. There are tons of wholesale sunglasses suppliers on the Internet. Just make sure you buy your sunglasses at wholesale, not retail.

How Do Wholesalers Make Their Money?

Wholesalers buy their products at cost. This means that if a pair of sunglasses costs five pennies to make, wholesalers buy those sunglasses for five pennies apeice. Wholesalers then turn around and offer the same sunglasses to you for a dime. They make a huge profit and you’re still saving money. It is almost impossible, unless you are a wholesaler, to find sunglasses or any other products at cost. This is why retailers and others must go through wholesalers, who have access to at-cost products. But even if wholesalers are making money off of you, you’re making money off of your customers. This is the way that product-selling works.

Wholesale Sunglasses

By buying wholesale sunglasses and then selling them at retail prices, you directly profit from every single sale. If you buy each pair for one dollar and then sell them each for ten, that’s a huge return! That may sound impossible, but wholesale sunglasses can be purchased very cheaply and sold for much higher prices. Why is this possible? Because most people don’t know how to buy wholesale or even that it can be done.
Summer’s on its way, and everyone is worrying about how best to shade their eyes. Hot, new styles of sunglasses are selling out almost as soon as they come into stores. Buying wholesale sunglasses is your way to cash in on the action, and make profit for yourself. Why buy retail when you can buy wholesale?

One of the rising issues with a wholesale distributor is getting both parties trust- both from you and his part to conduct immediate business. Since many of today wholesale list online offer hundred and in many, thousands of potential distributors and wholesalers- sometimes it is just not easy getting the most important initial trust bond between your wallet and your potential provider.

Why it is not easy to establish a trust bond between a new wholesaler and distributor from a potential small-based-business? The main reason of this trust-bond issue rise when you start to get hundreds and thousands of targeted visitors to your sites every single day. You not only get visitors, but one of the greatest benefits of being open to huge amounts of targeted readers is that you get the benefit of joint venture partners.

As you get potential joint venture partners, your e-commerce hosting server can crash and burn from floods of visitors in an initial time frame or you can even downgrade your business for the most economical hosting option, that is depending how good your joint venture partner found is. Pretty much, the more customers you have on a monthly, weekly or daily basis- the more cautious you need to be with whom you conduct business with today and tomorrow.

One of the greatest tools to identify who you are really dealing with is called “Read Notify”. You can make a search in any popular search engine like Yahoo, Google or MSN and find the dot com name immediately. Such tool works as a tracking device when sending email.

The beauty of it is that when you get partners and middleman trying to post as a real legit distributor- you can know a lot more about the facts about the company trying to unite with you or conduct business and finally met initial trust bonds between you and your new trading partner. As for say, have you ever wanted to run an FBI check on your partner or potential new business acquaintance?

While there is nothing better than someone from the FBI telling you everything about a guy history, you definitely can do an in-deep investigation on your wholesale list contacts or your new wholesale distributor without even asking the new party!

Here is how this excellent tool works wonders for many of us. When you send an email to a small-based-business operator or the guy and entity in which you want to conduct business- chances are he will open the email to see whatever is that you have to say to him for both his company and pocket wise benefits, he then opens such electronic mail- what do you get? You immediately get crucial information from him, the receiver such as:

The exact location of where the email is being opened, tracked by I.P Address. Like if you live in Guaynabo, Puerto Rico and you are sending him an email from Sydney, Australia- the system most of the time will give you from 70-100% possibilities of the nearby street number of where he is located. Such tracking device tells you then of course the city and country and the exact time when the person opened the email, all in real time. Do you need to chase or potentially bribe an FBI agent to get this kind of information?

Of course not, not ethical and not legal- but you can investigate that yourself! So could you imagine what could a tool like this really do for you and your e-commerce negotiations if you received many joint venture offers or are skeptical of the person who wants to conduct business with you?

Getting a liar who tells you he is a wholesale distributor from the USA when the correct location of his whereabouts are in Berlin, Pakistan or other hot places where you should not commercially trade or ship any kind of package, could mean a lot for your business safety- especially if you happen to buy the everyday scandalous wholesale riches scheme story from someone who just does not know what his talking about.

The ability to spot a fake wholesale distributor can save you a lot of time, money, and trouble. There are many things to look out for when sourcing products from a potential wholesale distributor. If you are trying to find a wholesale distributor for your home business or just looking to add new items to your catalog then you need to be on the watch for the certain signs of a fake wholesale distributor to avoid disaster.

If you found your wholesale distributors’ website in a major search engine chances are that they are not a real factory direct source. The reason why is that most of all wholesale distributors do not have a budget to market their products over the web. They have contracts with large companies they ship products to regularly. They don’t need to spend money on marketing their products because the company that made the products will handle all the advertising. A wholesale distributors’ only job is to warehouse the products they receive from the factory and ship them out to the companies who are buying them for resell. It does not make any sense for them to spend money on marketing the products they have. This is why if you find a huge website full of products for resell, chances are it is a middleman buying the products in bulk, marking up the price a little bit, offering a drop shipping service to you, and getting you to do all the hard work for less money.

Another sign of a fake wholesale distributor is if they require a membership. Some will try to charge you a monthly fee to do business with you. This does not make any sense either. If you are buying products from a wholesale distributor they are making money from the products you are purchasing. Would you make your customers pay a monthly fee just to be able to buy your products in your store?

A real wholesale distributor needs your federal tax id number and resellers permit to do business with you. They need this so they do not have to charge you sales tax. When a potential wholesale distributor asks for this information you can count on them being a legit factory direct dealer.

A fake wholesale distributor could tell you that all you need to do is fill out a W-2 form and give them your social security number. They tell you that for the products you sell they will send you a check each and every month for your commissions. While this isn’t a bad thing, this sounds pretty easy. The easy way is the hard way though and you have to consider how many other people are selling the same products on the web at the same low prices. You will have a very hard time selling products from these types of dealers.

To run a successful ecommerce home business you need to eliminate any middleman and source products in bulk. A drop shipping supplier, even if they are a real factory direct source, will charge you more for their products and shipping services since you are not buying in quantity. To be successful you need the best price for quality products and the only way to obtain low prices are to source products from a real bulk wholesale distributor, one business to another. The easy road is the one most often traveled and you will learn that it leads no where.

If you want to make money selling on ebay, you should look at finding yourself a wholesaler in the field you are selling in. A wholesaler is the ‘bridge’ between the manufacturer and the retailer. Quite often the manufacturer doesn’t want to deal with individual retailers because of they may only sell hundreds of their product, whereas the wholesaler can sell thousands. Because of this, they only mark up their prices probably around 15%.

Wholesalers have only recently found the power of the internet, with more and more are shifting from having just an online prescence to having a full e-commerce site. And that’s good news for the retailer.

Due to the nature of the wholesaler, they won’t deal with end consumers, and only deal with ‘traders’, but that doesn’t mean they won’t deal with you. Provided you are going to be buying in bulk, in general the wholesaler will sell to you. Being a trader simply means you’re not going to keep the products you buy. If you’re selling on ebay as a hobby that still means you’re a trader. You don’t need to set up a company, the same way you don’t need to when you sell at car boot sales.

So now you know what a wholesaler is, how do you go about finding one. Buy a wholesaler list from ebay, right? Wrong! Those lists may contain thousands of companies, but accurate are they? In my experience, not very. Out of interest I bought a list, and 90% of the wholesalers listed aren’t in the country you’re interested in. Very few had websites, and some just had mobile phone numbers as the contact, which were not in service. Don’t waste your money. They are out of date as soon as they are put on the cd, or in the PDF.

You have a couple of options. The simplest is to pick up the Yellow Pages (or visit Yell.com). You’ll be suprised how many there are on your doorstep. Just pay them a visit explaining that you’re starting to sell online. Some do require letterheads etc, but many don’t. All it takes is a visit to find out.

The other way is to visit a trader directory website. There are a few on the net, but most of them require you to pay to see the wholesalers listed. I think this is backwards. It’s like asking you to pay every month for the use of the Yellow Pages. The right way to do it is to have free access, but if any payment is required, it should be from the advertiser. There is another benefit to the advertiser/wholesaler too, and that’s their page ranking. Search engines look at how many other sites are linking to their site, and more specifically, sites that are related (by theme/topic etc) to each other. Having similar sites linking will improve the page ranking of those sites, which will make them appear higher in search engines. But I digress.

When you find a wholesaler, visit his site. If he’s in the UK, he needs to have a contact name, address and number on their site (as required by section 4 of the Business Names Act, 1985). If they are a registered company, their company number needs to be visible also. You can use this to check how long the company has been in business and their registered address. Give them a call and have a chat. If they’re legit then they’ll welcome the call and quite happily answer any questions.

Check the terms and conditions. Because they sell in bulk, there may be a minimum order quantity for individual items, or a minumum order value. This can be as little as £50 or as much as £1000.

You may need to register to see the wholesale prices. This shouldn’t pose a problem. Once you’ve got the prices, compare them to similar items on ebay to see what kinds of profit you can make. I’ve found prices for the same item can vary quite dramatically between wholesalers. This is because wholesalers get discounts from the manufacturer depending on the amount they can sell. The more they sell, the bigger the discount.

Build up a good relationship with them if possible. Some online wholesalers are very friendly and offer what feels like a personal service. If you are regular, they may provide an even higher level of service.

There has been an explosion in the number of wholesale companies over the past 5 years. A great majority of this growth can be attributed to the growth of the Internet. The Internet offers the small-time operator a place to market their products without having to spend a fortune in a physical store front. The number of people that can now sell products is no longer restricted to the store owners, so we now have a huge population of Internet entrepreneurs looking for products to sell. This big demand created a very big supply of so-called companies claiming to be wholesale companies specializing in selling wholesale products to Internet entrepreneurs.

Are all of these new wholesale companies really selling wholesale products? The short answer is absolutely not! Not even close… but let’s go over the longer answer so you can get an idea of what types of operations the majority of these so-called wholesale companies operate.

If I was forced to make my best guess of the percentage of true wholesale companies behind all the Internet and Opportunity magazine advertisements, I’d say that maybe, just maybe, 0.5% of those companies is an actual lagitimate wholesale company. Obviously that means I think that 99.5% are not true wholesale compaines.

If a majority of the wholesale companies being advertised are not true wholesale companies, then what are they and where are they getting their products? They are likely just middleman operating within a chain of middleman.

A Middleman-chain occurs when a business purchases its resale products from one wholesale company, who in turn purchases the products from another wholesale company, which may also purchase the products from yet another wholesale company, and so on. Note: I am using the term ‘wholesale’ very loosely here.

For example, let us say you have a resale business and you are buying products from a wholesaler, who we will call Wholesaler-A, at 20% discount. It is likely that Wholesaler-A is actually purchasing the same products from another wholesaler; let us call them Wholesaler-B. Wholesaler-B may get the products for a 40% discount and then sell them to Wholesaler-A at the 30% discount level, thus making 10% profit. There may even be another level, Wholesaler-C, which gets the products for a 50% discount and then sells them to Wholesale-B at 40% discount, making another 10% profit. See a graphical representation of this process at http://www.victorykey.com/images/middleman_chain.gif.

As you can see from the diagram in the above link, there can be multiple layers of wholesalers creating a chain of middlemen that you simply cannot afford.

As a result of middleman-chaining, each layer adds on its profit and you are left unable to compete because you are not buying the products at a low enough price to stay in business. If you do, by chance, get orders, each company in the chain is a point of failure in your transaction.

For example, let us assume you have a source for a product which is in high demand and you are paying what you believe to be a true wholesale price, say 20% discount. You then launch an advertising campaign that pulls in a large number of orders only to find that one of your back-end suppliers somewhere up the chain cannot handle the volume. Your customers obviously want their money back (including shipping & handling) and you find that you have lost a lot of money in advertising and created a bunch of angry customers that will likely never buy from you again!

One question you may be asking is why doesn’t every wholesaler just buy from the manufacture and get the deepest discount? The answer is simple – not all wholesalers (or companies claiming to be wholesalers) can afford to purchase the minimum bulk-order requirements that a manufacture requires. Secondly, many manufactures only do business with companies that are established. So now you are left to do business with a level-1 wholesaler (Wholesaler-C in above diagram), which can be very profitable if the products have demand. However, a level-1 wholesaler may also require a bulk purchase that is outside the budget of many small home business operators, and/or they simply may not want to do business with a small home business. Eventually you may find that a higher-level wholesaler (level-2, level-3, or higher) is all that is available to the home business operator, and you simply can not make any significant money at this level. Unfortunately, just about every wholesaler you see advertising in the opportunity magazines or Internet is a level-2 or higher wholesaler.

Now, armed with the above knowledge of middleman-chaining, make sure you take a closer look at all those wholesale product advertisements before taking out your wallet!

Sincerely,

Michael Ellis