Subscribe to Entrepreneur for $5

Types Of Suppliers

Know your suppliers and how they can help your business

Opinions expressed by Entrepreneur contributors are their own.

Suppliers are essential to any retail business. Depending on your inventory selection, you may need a few or dozens. Sometimes suppliers will contact you through their sales representatives, but more often, particularly when you're starting out, you'll need to locate them yourself--either at trade shows, wholesale showrooms and conventions, or through buyers directories, industry contacts, the Business-to-Business Yellow Pages and trade journals.

Suppliers can be divided into four general categories.

1. Manufacturers: Most retailers buy through company salespeople or independent representatives who handle the wares of several different companies. Prices from these sources are usually lowest, unless the retailer's location makes shipping freight costly.

2. Distributors: Also known as wholesalers, brokers or jobbers, distributors buy in quantity from several manufacturers and warehouse the goods for sale to retailers. Although their prices are higher than a manufacturer's, they can supply retailers with small orders from a variety of manufacturers. (Some manufacturers refuse to fill small orders.) A lower freight bill and quick delivery time from a nearby distributor often compensates for the higher per-item cost.

3. Independent craftspeople: Exclusive distribution of unique creations is frequently offered by independent craftspeople, who sell through reps or at trade shows.

4. Import sources: Many retailers buy foreign goods from a domestic importer, who operates much like a domestic wholesaler. Or, depending on your familiarity with overseas sources, you may want to travel abroad to buy goods.

Excerpted from Start Your Own Business: The Only Start-Up Book You'll Ever Need, by Rieva Lesonsky and the Staff of Entrepreneur Magazine, © 1998 Entrepreneur Press

Entrepreneur Editors' Picks