How to Buy Wholesale | Everything You Need to Know
Starting a retail business is complex, but one of the first things to figure out is where your products will come from. This could mean buying wholesale. But, how to buy wholesale?
Instead, most retailers don’t make their products but get them from wholesalers. They are excellent sources of products because they grow and evolve with your business.
We’ve been working with retailers for over a decade, and we’re sharing our best tips to help you get started. Wholesale can seem mysterious at first because there are so many variables involved.
- When you buy wholesale, it means that the seller is selling their product to an individual buyer at a price lower than what they would charge if they were only dealing with retail stores.
- How to find a wholesaler
- How to choose a wholesaler
- In addition to paying attention to the quality of your purchase, it is essential that you also consider what type of wholesale company you are buying from.
Prepare your business for the future of commerce. Owners and operators confront a whole new set of issues when the retail industry reopens across North America.
What does it mean to buy wholesale?
Buying wholesale and retail are two different things. When you buy from a wholesaler, you’re shopping at the middleman between your store and the manufacturer. What does wholesale mean? Wholesale purchase is almost always made in bulk, which means it will be cheaper than buying on an individual basis or at retail prices because of volume discounts for large quantities purchases.
There is a margin between wholesale and retail prices in the retail industry. The Gross Profit can be determined by determining the best pricing strategy for your business when calculating your margins.
Gross Profit is the revenue minus all costs of goods sold (COGS).
Revenue equals the retail price of what you sell. COGS includes all variable costs and covers materials and labor expenses from producing goods for sale. When it comes to buying wholesale, this formula is a bit more complicated but can be used to calculate Profit.
A retailer will often buy goods at a wholesale price and then raise the cost of those items to make money. A good example is purchasing t-shirts for $2 each but selling them for much more.
If you are an entrepreneur, consider the markup before purchasing inventory. This is because if your wholesaler prices are too high for a product that sells well in your store, it will affect profitability.
Similarly, it would help if you were sure that your prices were in line with the market. It’s easier than ever for customers to find alternatives and make purchases elsewhere if they feel like a company is too expensive or doesn’t offer good value.
These requirements exist to ensure that the wholesaler hits its targets for revenue and profitability.
When ordering products, it’s best to call them in bulk because of the minimum orders. You can use your POS system for this and see what is most profitable.
How to find a wholesaler
One of the first steps to buy wholesale is finding a wholesaler. There are many ways to find a wholesaler. One way is through your local chamber of commerce, which often has good information on potential suppliers. Another great option is crowdsourcing from other business owners in the same industry – they may have advice about reputable and not-so-reputable sellers.
There are also many manufacturers on websites like eBay and Etsy. These marketplaces can serve different audiences, but there is an overlap with both platforms offering messaging features to make contact easy.
How to choose a wholesaler
In knowing how to buy wholesale, you must choose a wholesaler. When searching for a wholesaler, Google them and read reviews of other retailers who have worked with them. This will give you an idea about the quality of their service. After that, narrow your list down to three possible choices before contacting each one.
What merchandise do you sell?
If you’re selling a wide range of items or your store, in particular, it’s essential to find wholesale partners that carry the products you need. It might be necessary to work with more than one wholesaler to get your business’s required inventory. However, making sure these suppliers offer goods and services that align with the brand will keep customers coming back.
What is your price point?
As a wholesaler, you are responsible for making money off the products they sell. The best way to do this is by getting competitive pricing from your supplier so that you can hit your desired profit margins.
Is the wholesaler reliable?
Don’t work with people who can’t meet your deadlines or be reliable. Wholesalers that consistently fail to deliver on time, never show up at all, and always come back damaged are not suitable for business.
Do they have a good attitude?
Before working with a company, ensure that they have excellent customer service. If the company is not there when you need them or their customer service team does not answer your questions satisfactorily, it may be time to find another wholesale partner.
The amount of knowledge they have about the product is what matters.
Your wholesaler should be well-versed in the things they are selling. This lets you make sure that your supplier is aware of their product’s quality and performance, but it also allows them to answer any questions about what they are selling.
Can they help you dropship?
When it comes to shipping, one option is drop-shipping. Drop-shipping means that the wholesaler stores your inventory and handles all your shipping. When someone places an order from an eCommerce store, the information is passed on to the supplier, who then ships directly to them.
When it comes to buying wholesale, what are some other things to keep in mind?
When buying wholesale, it’s essential to find your reorder points.
You’ll need to calculate how much you should buy, and this calculator will help. Just input the number of items used up in a period (or time), and it can tell you when your next order is due.
With your reorder points in place, you can now use Lightspeed Retail to monitor which items are running low on stock. Running the Replace List report will tell you what needs to be restocked and how much.
One way how to buy wholesale is to negotiate. It’s okay to negotiate
When it’s necessary, you can negotiate the price of a product. Let your suppliers know how much business they can expect from you and if it is high, then be willing to offer a better deal.
Organize storage space
Finally, before your wholesale order arrives, you will need to have a storage room. Having enough shelving and labeling is essential in ensuring that you do not lose track of anything.
Getting the right products for your store
Buying wholesale merchandise is an essential step in increasing your profits and inventory. It would help if you took the time to do the math to know what prices would work for you.
When it comes to buying wholesale, use your POS system to help you crunch the numbers.
Having all of these facts figured out beforehand will make it easier for you to make smarter decisions that will grow your business.