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What is Drop Shipping?

Sell what Sells, NOT what's Cool

The Wholesale Misconception

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Wolves in Wholesale Suppliers' C...

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wholesalers - Seeing the Whole Picture - A Wholesaler's Role in the Retail Chain

by Chris Malta

You probably realize that, as a retailer, you need to get as close as possible to the source of your products to maximize your profit margins. But if you're like most retailers, you may think that means going to the product manufacturer. You might assume that because the wholesaler stands between you and the manufacturer, the wholesaler is a middleman. But by that logic, you as a retailer are also a middleman, standing between the manufacturer and the end user.

To Each His Own
The fact is that each one of these entities plays an important and necessary role in the retail supply chain:

  • The Manufacturer. Their primary function is making products — they're not set up to supply individual retailers with small quantities of those products. Through a very complex process, they qualify and authorize a select few wholesalers to distribute their products to retailers on their behalf.


  • The Wholesaler. The wholesaler provides a tremendous service to both the manufacturer and the retailer alike. Explains Don Beavers, of wholesale supplier VertexAirsoft.com, "Wholesalers are required by manufacturers to order astronomically high product quantities that individual store owners can't afford, and to carry the manufacturer's entire product line, rather than just their hot sellers."

    Wholesalers have the warehouse space, sales networks, local and long-distance trucking operations, and computer and tracking systems in place to take and fill store orders. They possess the necessary infrastructure to stock massive amounts of product, and distribute them in smaller amounts to retailers all across the country.


  • The Retailer. This is the last necessary link in the supply chain to get the products consumers are demanding into the market. The same way that a manufacturer isn't set up to sell to retailers, wholesalers aren't set up to sell to individual consumers — retailers fill that need.
Cutting In
A proper supply chain looks like this:

Manufacturer→ Wholesaler→ Retailer→ End User

Often, however, as a retailer, you lose out when extra links are added to the chain:

Manufacturer→ Wholesaler→ Middleman→ Retailer→ End User

Unfortunately, there are many middlemen eager to get in between the wholesaler and you. They claim to be wholesalers themselves and pass real wholesale goods on to you at marked-up prices, eating away at your profit margins. You'll find plenty of middlemen in the search engines, but very few wholesalers.

To find authentic wholesalers, you need to contact the manufacturer for their list of factory-authorized dealers.

Working with Wholesalers: How and Why
To earn serious money as an online retailer, you absolutely have to work with REAL wholesalers — and that means getting a legal business name and Tax ID. You may be tempted to skip this step, in order to avoid the paperwork. But you need these items to establish accounts with any genuine wholesaler.

A supplier that tells you they don't need your Tax ID — regardless of the explanation they give you — is a middleman, NOT a real wholesaler. Period. No matter how enticing a product sourcing shortcut looks, it will cost you in the long run.

Getting genuine wholesale pricing lets you charge competitive prices and still make a profit. Real wholesalers supply your business with the products you need, at the prices you need. Insists Beavers, "If you want to make your living from your Internet business, real wholesalers need to be a major part of your product sourcing strategy."

 
Archive List

ARTICLE ARCHIVE LIST

 

What is Drop Shipping?

Sell what Sells, NOT what's Cool

The Wholesale Misconception

Don't Get Taken by a Fake Suppli...

Wolves in Wholesale Suppliers' C...

Working Within the Process

Is Santa's Sleigh Big Enough for...

Beware of Drop Shipping 'Agents'...

Direct From The Factory?

4 Strategies for Seasonal Sellin...

3 Tools for Product Sourcing on ...

Tradeshows the Right Way - How t...

Tradeshow Sourcing - When the Sh...

Preparing for the Holiday Season...

What a Wholesale Supplier Expect...

Product Sourcing Using Trade Pub...

Tips for Finding and Getting Goo...

Storage Units Auctions - Buying ...

Starting an Antiques and Collect...

How EBay PowerSellers Source Pro...

How to Build Your Online Consign...

Dangerous Mindsets - Changing th...

Sourcing Customer Returns - Buyi...

Product Sourcing Strategies - Ne...

6 Common Product Sourcing Questi...

Increasing Your Profits through ...

Importing Basics - What You Need...

Selecting and Changing Your Prod...

The Inside Scoop on Trade Shows ...

How to Make Product Liquidation ...

Shopping with Uncle Sam - A Brea...

One Man's Trash... Could Be Your...

Our Town - Sourcing Products Loc...

An Intro to Closeouts - A Produc...

How to Find Authentic Suppliers ...

Beyond Borders - Sourcing Overse...

Heads or Tails? - How to Find Yo...

Five Holiday Trends - What Every...

Seeing the Whole Picture - A Who...

Drop Shipping Pros and Cons - th...

Far From Home - 4 Keys to Succes...

Product Sourcing Strategies for ...

The Ins and Outs of Importing - ...

How to Choose Your Product Lineu...

The Fine Art of Product Sourcing...

Sourcing The Secondary Market - ...

Local Sourcing Techniques - Prod...

Global Sourcing - Importing for ...

A Foreign Affair - Preparing to ...

Choose Wisely - How to a Pick Pr...

Made in China - Importing Option...

The Color of Money - How Color T...

The Nuts and Bolts of Liquidatio...

How to Break Into Importing - An...

Trend or Fad? What to Ask Before...

What Your Country Can Do for You...

Opportunities Abroad - China Sou...

Trade Shows Year-Round - What Pe...

5 Product Trends for 2008 that E...

Successfully Negotiating with Yo...

5 Strategies for Safely Sourcing...

Informed Compliance for e-Tailer...

Locate Qualified Drop Shippers f...

What is Product Sourcing? The So...

Where Do I Find Products to Sell...

Tips for Finding and Working wit...

A Beginner's Guide to Buying Dir...