The process of finding the right wholesaler for your business can be overwhelming. In this post, we’ll explain what wholesalers do, how to find them, and what to look for before you place your first order.
You have a lot of options when it comes to sourcing products for your ecommerce business. You might craft items by hand, or work with a manufacturer or white label producer to make custom goods. If you want to purchase products in bulk to resell for a profit, wholesale might be for you.
What is a wholesale supplier?
A wholesale supplier acts as a middleman between manufacturers and sellers. Typically, a wholesaler doesn’t sell directly to the end consumers. Instead, a wholesale license allows them to buy products in bulk from manufacturers at a discount and resell the products to business owners at a slight markup. You can then resell the products to customers for a profit.
Why work with a wholesaler?
If you want the flexibility to curate products for your business as opposed to working directly with a manufacturer, consider working with a wholesaler. Wholesalers already have manufactured products for you to choose from, so you don’t have to handle product development or procure raw materials.
Is a wholesaler right for your business? To begin with, it’ll depend on what products you want to sell. Here’s what to look for before you sign on the dotted line.
5 tips to find a supplier
- Decide what you want to sell
- Try reverse sourcing
- Keep logistics top of mind
- Ask about costs and fees
- Do your research
1. Decide what you want to sell
Do you want to focus on a niche product, or carry a wide selection of different items? One way to get a sense for what’s out there is to browse the catalogs of different wholesalers. Keep these tips for choosing the right product in mind (such as storage requirements) as you zero in on products to purchase in large quantities and sell for a profit.
What quantity do you want? With wholesale, the goal is to purchase enough to benefit from the wholesale discount, but avoid ending up with more product than you can distribute. Check to see if the wholesaler requires a minimum order quantity. Request samples, weigh the cost with the quality of the products—and remember, the numbers are probably negotiable.
2. Try reverse sourcing
Traditional wholesale starts with comparing the catalogs of different suppliers, then picking and choosing the products you want to specialize in. Reverse sourcing is where you do the opposite: Start with a single product and find wholesalers that carry it.
Are you worried about spending time and resources selecting products, only to find you have a hard time reselling them? Reverse sourcing offers one way to potentially eliminate some of this risk, because you begin with products which you already know are selling well.
An example of how reverse sourcing works is to research products in Amazon’s store:
- Check out the Best Sellers list and explore different categories
- Narrow your search by department depending on what type of products you’re interested in
- Look for products that are in high demand or not well represented, with options from few sellers
- Keep track of brands and use research to trace products back to their supply source
- Contact the supplier to see if you can purchase the product in bulk
From there, decide whether you want to request a sample, place an order, or begin your reverse sourcing search over again.
3. Keep logistics top of mind
Have you considered how a wholesaler can fit in with your business model? Before you reach out, make sure you have adequate inventory systems in place, with enough space to organize and store inventory even during peak sales periods.
Ask suppliers about their timelines with manufacturers for sending and receiving products, and how quickly you can expect to receive orders. Track when you’ll receive shipments and think about how you’ll get orders to customers. Additionally, ask the wholesaler about their returns process.
Learn more in this inventory management guide.
4. Ask about costs and fees
Don’t be caught off guard when you see the final number. Assess the costs and fees for wholesalers you’d like to work with. Ask about:
- Minimum order quantities (MOQs)
- Cost per unit
- Any other costs, such as membership fees
Typically, the more you order, the lower your cost per unit. Remember, the goal is to spend enough to receive the full benefit of a wholesale discount, but not overspend. For example, if you want to buy 50 items, but the price break only happens if you buy 200 items, it might be a good idea to seek out other deals.
5. Do your research
As you continue to refine your wholesale options, here are a handful of other helpful steps you can take:
- Ask for referrals. Check for reviews from satisfied customers, or ask around to see if people have had a good experience with a given wholesaler.
- Check for complaints. Poor customer service, damaged or missing products, and other issues could be red flags. Ask the supplier about their liability policy.
- Have your business license and tax identification number ready. Wholesalers cannot legally speak to you without verifying this info first.
Pro Tip: Use Cost, Pricing, and Revenue Tools
Delivery and fulfillment
The right sourcing method for your business might come down to how you want to get products to customers. Here are the details on three common fulfillment options:
Fulfillment by Amazon
If you don’t want to store, package, or ship products, some suppliers can ship directly to customers. However, this method can potentially limit your opportunities to build a brand or differentiate products. Learn more about dropshipping.
Fulfillment by Merchant (FBM or MFN)
Fulfillment by Merchant (or Merchant Fulfilled Network when you list products in Amazon stores) is a fulfillment option where you handle storing and shipping of orders in-house. Learn more about how to handle fulfillment yourself in this guide to ecommerce fulfillment.
Did you know? You can find wholesalers and other supply companies through the Amazon Service Provider Network
Amazon’s Service Provider Network is a resource for finding wholesalers and other suppliers along with vetted providers of other services ranging from accounting and translation to enhanced brand content. It also allows you to browse third-party apps for cost calculation, automated inventory reporting, and more.
What is a wholesaler?
A wholesaler is a supply company which acts as a middleman between manufacturers and sellers. A wholesale license allows them to buy products in bulk from manufacturers at a discount and sell them to business owners at a slight markup. A wholesaler doesn’t typically sell products directly to the end consumers.
What is wholesale sourcing?
Wholesale sourcing is where a business purchases products in bulk at a discount from a wholesale supplier. The seller can then repackage the products and sell them to customers for a profit.
Is wholesaling allowed in Amazon’s store?
Sellers who list products in Amazon’s store have the option to source products through a wholesale supplier. Selling bulk items at a wholesale discount is not allowed in Amazon stores.
How do I find suppliers for my small business?
One way to find suppliers is to first narrow down what you want to sell. Then, research supply companies that offer those products. Going to trade shows, asking for referrals, and joining professional networks are three examples of conventional ways to connect with suppliers.
You can also find a supplier through reverse sourcing. Start by zeroing in on products that are in high demand, then locate suppliers who can provide you with those products. Try the Amazon Best Sellers list as a starting place.
Browse the Amazon Service Provider Network to find wholesalers and other vetted service providers to help you grow your business.
How do you find out where a product is manufactured?
One way is to check the product for information on the manufacturer. It’s often included on a label or stamped on the product itself.
You can also try researching the brand. Some manufacturers list products by NAICS code. In this case, you can try to locate them through professional directories. The NAICS directory can be found at your local library or online.
What do I need to contact a wholesaler?
You’ll need your business license and tax identification number. A wholesaler cannot legally speak to you without verifying this information first.
How do I work with a wholesale supplier?
Ask the wholesale supplier for references and complete a search for any complaints filed against them. Keep logistics such as delivery timeframes and return policies top of mind and evaluate how the wholesaler can fit into your business model. Purchase enough to receive the benefit of a wholesale discount, but don’t be tempted to overspend if you’ll run the risk of ending up with more stock than you can sell. Inquire about minimum order quantities as well as other costs and fees.
What is reverse sourcing wholesale and how does it work in Amazon’s store?
Reverse sourcing wholesale is a method of sourcing where you start by identifying popular products and then seek out wholesalers with those products in their catalogs. One way to reverse source is by researching high demand products in Amazon’s store. Then, browse the Amazon Service Provider Network to locate wholesalers who sell those products.