wholesalers - Seeing the Whole Picture - A Wholesaler's Role in the Retail Chain
by Chris Malta
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.
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."