Everything you Need to Know About How to Buy Wholesale
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Last updated
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When you start a retail business, one of the first things to figure out is where you’re going to find products to sell. This might mean buying from wholesalers and .
Most retailers don’t make their own merchandise. Instead, they get their products from wholesalers. Not only are wholesalers great sources of merchandise, but as your business grows and evolves, they’re flexible enough to support you along the way.
Buying wholesale can seem a little mysterious at first, which is why we’re sharing our tips to help you get started, how to find wholesalers and how to get wholesale prices. We’ve been helping retailers do better business for over a decade.
Have you ever wondered where do businesses buy their products? Buying retail and wholesale are two different things. When you buy merchandise from a wholesaler, you’re shopping from the middleman between your retail store and the manufacturer. A wholesale purchase is almost always made in bulk, and because of that, you pay a discounted price for the purchase.
After you buy products from a wholesaler(), you can then sell them at your own store at a higher price to make a profit. This higher price is called the retail price, and it’s what customers will pay when they shop in your store. Customers are willing to pay the higher price because the retailer takes on the cost and logistics of buying and storing wholesale items (and delivering excellent customer service).
The difference between the retail and the wholesale prices is called the margin. It’s the amount of profit that a retailer gets from a sale. The retail price typically varies between businesses, and there are a few different pricing strategies that can be used to determine the best retail price for you. Once you do this, you can then determine your gross profit.
There are several ways to find a wholesaler. You can approach wholesalers or distributors individually, or you can work with a B2B wholesale marketplace() to streamline the process.
Wholesalers aren’t one-size-fits-all. There are a range of wholesale businesses that work with retailers (and, sometimes, consumers). The type of wholesaler you work with will depend on the specific items you’re buying in bulk, the retail niche you want to fit in, the kinds of relationships you are able to build and the wholesale ordering technology you want to work with.
Manufacturers: some, but not all, manufacturers also act as wholesalers. Because there are less middlemen, buying directly from a manufacturer may net you lower wholesale prices. However, buying directly isn’t always available as an option—and even when it is, it isn’t always the most convenient.
Retail wholesalers: retail wholesalers sell products in bulk to retailers at a slight markup from manufacturers. Buying through a retail wholesaler means you can purchase wholesale items from more than one manufacturer.
Merchant wholesalers: as opposed to retail wholesalers, merchant wholesalers sell to both retailers and the end customer. They generally have lower minimum order sizes in light of this, and are your direct competition while also being suppliers.
B2B wholesale marketplaces: this is the most convenient option. Wholesalers and brands come together on B2B wholesale marketplaces like , where retailers can browse and order products much more efficiently than the traditional email-and-purchase-order format.
Searching for wholesale items online can be a gamble. Not all aggregate sites thoroughly vet their wholesalers, and not all legitimate wholesalers have high-ranking or well-designed sites. You don’t always know if you can trust someone on some of the big marketplaces.
To look for legitimate wholesalers, your local chamber of commerce is often a good place to start. If you’re in touch with other business owners, crowdsourcing from your network is another great way to get info on which wholesalers you should look into and which ones you should avoid.
For trustworthy wholesalers online, try a B2B wholesale marketplace with strict standards for brands. B2B marketplaces make it easier to find wholesale items, as you’ll be able to browse catalogs online.
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In addition to figuring out which items to buy, you’ll need to calculate how much you need to buy. To avoid under or overestimating, use this free calculator to find your reorder point for each item.
Now that you have your reorder points, you can use Lightspeed Retail to help you keep track of which items are at or below their desired inventory levels. Once you’ve put your reorder points into your inventory listings, running the Reorder List report will let you know which items are low on stock and how much you need to reorder.
Lastly, before your wholesale order arrives, you’ll also need to have an organized place to store it (unless you’re drop shipping). Having a storage room with adequate shelving makes finding different parts of your inventory that much easier. Keeping things labeled will make sure you don’t lose track of anything. If your inventory exceeds the confines of your storage room, consider upgrading to a warehouse equipped with industrial equipment meant to handle large scale fulfillment needs.
Figuring out how to buy wholesale to resell merchandise is an important step in increasing your profits and inventory. That’s why it’s important to take the time to do the math to make sure you’re buying and selling merchandise at prices that will work for you and your business.
You can use your POS system to help you crunch the numbers. Work with wholesalers who sell high-quality products, are reliable and can support your growth. By asking the right questions and having the numbers figured out, you’ll be well on your way to making smarter decisions to grow your business.
Want to learn more about Lightspeed’s commerce platform and how it can help you better manage suppliers, inventory and purchase orders? Watch a free demo today.
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Don’t be afraid to negotiate the price of goods when you need to. Let the supplier know if your sales are doing well and how much business they can expect from you in order to get a better deal. Be honest and fair in your negotiations to form a longstanding relationship with your wholesalers().
