The mantra of every successful entrepreneur who sells products is the same--buy low and sell high. Your ability to buy cheap is of paramount importance; after all, it makes up 50 percent of the success equation.
If you plan to buy and sell new products, your buying sources will include manufacturers, sales agents, craftspeople, wholesalers, importers, distributors and liquidators. Deciding whom you will buy from will be largely based on criteria relative to your specific needs, and revolve around product price, supplier reliability, product quality, product and supplier guarantee, supplier terms, and supplier fulfillment. For instance, if you are short on storage space and adequate transportation, then suppliers who drop-ship orders directly to your paying customers will be a far more attractive supply source, even if their unit costs are higher than suppliers who do not offer drop-shipping options.
Buying previously owned items for resale is an entirely different ball game because the product sources are much different. There are no wholesalers, manufacturers and sales agents to supply you with cheap products for resale. Instead, you have to rely on your detective abilities and negotiation skills to track down the best items to purchase cheaply. These sources will include private sellers, auctions, flea markets, online marketplaces, garage sales, and thrift shops.
Traditional channels of distribution have greatly changed. At one time, all levels of distribution served an important function in the marketplace. Importers scoured the globe, visiting manufacturers for specific products, which they bought in large quantities and imported to their own countries. National wholesalers would then sell to local distributors, who sold to dealers or retailers, who in turn sold directly to businesses or consumers. It was not uncommon for a product to pass through four or five levels of distribution on its way from factory to end consumer, with each level adding a markup to cover expenses and profit.
Today, distribution roles are somewhat blurred, and there is overlap among wholesaler, distributor, importer and liquidator. But the end game of each is the same--sell products in volume to resellers at less than retail, enabling the resellers to sell to consumers and businesses for a profit. The information below focuses on three wholesale buying sources: wholesalers, liquidators, and importers. I must stress, however, that when you buy from these sources, you are not buying wholesale, but rather from a discount retailer, if they do not require a sales tax ID number. I mention this because recently there has been an increase in online businesses claiming to sell wholesale, when in fact they are discount retailers advertising as wholesalers. So always remember that if you are not asked for your sales tax ID number, you are not buying from a legitimate wholesale source. True wholesalers do not sell to the general public--only dealers, retailers, and resellers--and are referred to as business-to-business (B2B) wholesale sources.
- Wholesalers. Your first option for buying new products at less than retail is from wholesalers, who generally offer a broader range of merchandise than importers and manufacturers. General-merchandise wholesalers are the most common, and they stock and sell a vast range of household products. The next type of wholesaler is industry-specific, such as food wholesalers, tools and equipment wholesalers, or clothing and textile wholesalers.
There are really no tricks to buying from wholesalers as the process is pretty straightforward--find one who carries the type of merchandise you want to sell, open an account, and start buying wholesale. It is always a good idea to open accounts with more than one so you can shop for lowest price, take advantage of the specials each offers, and ensure that you always have a reliable supply in case one runs out.
- Liquidators. Next to factory direct, buying merchandise from liquidators will generally be your cheapest wholesale source of new products. Liquidators differ from wholesalers, distributors, and importers in that they do not carry a steady supply of the same items all the time. They purchase many types of merchandise from various sources, including retailers trying to unload out-of-season goods, returns, and slow-moving inventory; manufacturers selling seconds and end-of-run; insurance companies disposing of damaged and recovered merchandise; and inventory of all sorts from bankrupt retailers, wholesalers, distributors, and manufacturers. The variety of products that can be purchased from liquidators knows no limits--clothing, electronics, dollar-store items, sporting goods, kitchen and bath accessories, toys, books, and the list goes on. However, all merchandise is new, though it may be slightly damaged, seconds, store returns, out-of-season, or discontinued.
- Importers. Importers are another source of new merchandise at wholesale prices. As a rule of thumb, however, importers are usually product- or industry-specific. There are general merchandise importers, but they are not common. Most deal in specific products and sometimes very highly specialized products such as surgical rubber hose, or in specific subsections of industries such as hand tools. Buying from importers is the same as buying from wholesalers, distributors, or manufacturers. Source one or more and open a buying account. However, don't be surprised if more than one importer refuses to supply you. This is because some importers only work with large-volume clients. In time and with a little legwork, you will find an importer who will sell you the type of product you want to buy and sell. You will, of course, also want to consider factors such as price, quality, and reliability before choosing an importer.