So you want to sell retail?

Whether you are setting up a main street store or an online store, you are going to need a relationship with a wholesaler or wholesalers. The same goes for service-based businesses such as hair salons and auto body shops, who can often earn additional income from selling complementary products in their business location.

However, finding and forming a trusted relationship with the right wholesaler can seem a daunting prospect – unless you have done your research and have an idea of what to expect.

Here are some tips for finding and entering into a business relationship with wholesale suppliers for your retail business:

1) Set up a Legitimate Retail Business

Whether you plan to sell products from a concession stand, retail store, or e-commerce site (including eBay) first make sure you set your business up correctly and within the law.

This article – “How to Start a Retail Business – A Step-by-Step Guide” – explains the must-do’s when it comes to forming a business. You will also need to understand the tax implications of operating a retail business, this article “When does a Business Start Paying Taxes? A 101 in Small Business Tax Requirements” can help. If you operate an online e-commerce site, you will also need to read up on collecting sales taxes over the Internet.

2) Understanding the Wholesale Business – Types of Wholesalers

Wholesalers come in all shapes and sizes and serve retailers through a variety of distribution channels and supply chains. This chain starts with manufacturers, and includes importers or exclusive distributors (who often sell to wholesalers), wholesalers or regional distributors (who “distribute” goods locally) and brokers/jobbers (who often deliver wholesale goods to local small businesses such as small groceries stores).

It’s important to be aware that, as a new small business, it is unlikely that you will be able to buy directly from a high-volume wholesaler or manufacturer, simply because your sales volume won’t support buying in any kind of bulk, at least at the outset. There are however, many smaller manufacturers and wholesale distributors who will gladly sell and ship to small businesses. And as your sales volume grows you will be able to move up the supply chain and demand better wholesale volumes and subsequently, lower rates.

3) Finding Wholesalers

There are several paths you can follow to seek out reputable wholesalers. Here are just a few:

  • Talk to Others in Your Trade – If you know of similar businesses to yours in your locale, go and check out their merchandise. This can often give you a sense of what stock you need as well as which merchandise appears to be popular.  You can quickly gauge what their most successful stock is, often just by its placement. Products that don’t sell can often be found on the sale rack or clearance bin. If you feel confident enough that you won’t compete directly with the store, talk to the business owner about where they source their stock and ask for wholesale recommendations.
  • Talk to Brand Manufacturers - Brand manufacturers sometimes sell wholesale but usually only in high volume. However, it doesn’t hurt to contact them and ask.  If they don’t sell wholesale, they can often refer you to wholesalers or distributors who do. 
  • Search the Web – Don’t underestimate the power of local search engines. Google Search* and Yellow Pages* list just about every business in the U.S. and that includes wholesalers. Search for “wholesalers” by zip code, to quickly identity a shortlist of local suppliers.  Other sources include wholesale directories, such as www.wholesalecentral.com or www.alibaba.com, among others. These offer good sources of information and connect you instantly with wholesalers and importers in the U.S. and globally. You can also search the wholesale lots on eBay (via an easy search or by product category) – although these tend to be for very low volume retailers.   
  • Trade Shows - If you have the budget and the time to attend trade shows you may find that they are the best places to buy wholesale products. Trade show directories, one of the largest being www.tsnn.com, let you search for events by industry, zip code and date. To get the most out of a trade show, always plan ahead (have a goal, know your budget and inventory needs, identify exhibitors and set up appointments in advance). And remember, you are marketing your own business to potential wholesale “partners” too. Read “Effectively Marketing Your Business through Trade Shows” by small business author Rieva Lesonsky, to get tips on getting the most out of trade shows.
  • Trade Publications – Another direct way to source wholesalers in your particular industry or business is to read trade magazines. Many wholesalers use these magazines as a vehicle for placing ads.

4) Entering into an Agreement with a  Wholesale Vendor

Once you have identified a supplier(s) do your due diligence to ensure the reliability of their service and product quality. Ask for references and do your own research. The Better Business Bureau* can help you identify any complaints filed against a wholesaler. Read – Researching a Company Part 1 and Part 2 for tips and pointers that can help you assess whether your vendors are up to par.

You also need to ensure that the wholesaler’s sales representative explains their volume discounts, return policies, order processing time, as well as any terms-enforced restrictions such as  advertising conditions.

Take your time before making any decision and be ready to negotiate for what you need in terms of price, minimum order quantities, delivery schedules, etc. 

Once you have reached a decision, insist that any verbal agreements are added to the wholesale contract and, if you can, have a lawyer or attorney review it – especially if you are new to the retail business.

Happy selling!

 

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