Starting a wholesale business requires a good amount of capital upfront, but not as much as other business models. Wholesaling can also be scaled easily and quickly, once you establish strong connections with buyers. It allows for a lot of flexibility in the products you sell and who you sell them to.
Learning how to become a wholesaler can be overwhelming. There’s paperwork to complete, a website to set up, eCommerce software to select, eCommerce marketing strategy to plan, and customers to keep happy. Knowing how to buy wholesale items also means you know how to find vendors and understand what is wholesale before taking other actions.
The wholesale market has never offered more opportunities to ambitious individuals than it does today. Thousands of suppliers offer partial and complete goods through wholesale directories and global distributor networks.
Process for Buying Wholesale Items
Buying wholesale items is a simple process once you have your priorities figured out. Here is how to buy wholesale products:
- Perform market research. In the US alone, the wholesale market is growing at about 1.2% per year, contributing to predictable eCommerce growth. You’ll be competing against hundreds of other brands and both B2B vs B2C, so you need a vigorous marketing plan and a clear target audience to build traction.
- Establish a professional brand image upfront. Many suppliers have requirements in place to limit any inexperienced resellers they work with. If you have a professional image from day one, suppliers will be more motivated to work with you. Make sure that you have an account setup with one of the best bank for online transactions, and if required, have gotten an eCommerce business license.
- Decide on a niche. If you don’t yet know what wholesale items to sell, you should pick a category. Modern customers are heavily discerning in their purchases and won’t buy cheap goods simply for the cost savings. Select a niche and product provider that is as quality as your budget can afford.
- Browse a wholesale directory. This is any website that offers information on wholesale suppliers, their goods, and how to contact them. It’s an easy way to get your foot in the door and start building relationships. Note that the harder a supplier is to get in contact with, the more likely they are to be someone you want to work with because this indicates their products are in demand. On the other hand, it could mean their customer service is not up to par for your needs. Conduct your own research in these circumstances and only buy products with a reasonable wholesale price.
- Obtain your reseller’s permit and/or licensing agreement. A reseller’s permit is required to sell wholesale goods because it shows suppliers that you are a real business. A licensing agreement is similar to a permit. It’s used by suppliers to control the type, amount, and sometimes the market a product is sold in. Generally, licensing agreements apply to products where intellectual property or stiff competition is concerned.
- Attend trade shows and relevant events. There are few better ways to get your wholesale business started than by attending trade shows. This is where suppliers and handmade product creators display their goods and develop sales relationships. Look for owners who offer a low minimum order quantity (MOQ) and want to work with new resellers.
Now that you’re familiar with how to buy wholesale products, it’s useful to expand your knowledge according to your niche. Let’s look at best practices for buying specific types of wholesale goods.
How to Buy Wholesale Grocery Items
There are numerous ways to buy wholesale grocery items, and your buying approach will depend on what you’re selling. If you’re selling dried, packaged, or dehydrated goods, you can get these items from hundreds of suppliers online. Wholesale directories make it easy to browse food and drink categories. Make sure that you have the warehousing capabilities to store products like this.
If you want to sell fresh produce or perishable goods wholesale, you’ll need to build a relationship with local farmers and growers. There are dozens of farmers’ markets nationwide that partner with wholesale suppliers. Research what farmers expect of their wholesale relationships beforehand. This helps you get started with professional questions and an appealing offer.
How to Buy Bulk Wholesale Items
Buying wholesale items in bulk is where most wholesalers begin. The MOQs of most suppliers mandate that products are ordered in bulk; typically 100 units or more. Bulk shipping usually accompanies this approach, as well.
Start by looking for bulk suppliers. This isn’t difficult, as most suppliers understand resellers want bulk goods. This also allows you to keep shipping costs low and maximize resale profit.
Once you’ve found an appealing supplier, ask them what their MOQs and AOQs (average order quantities) are. This will give you a feel for how much you may order from them, and how often. Also familiarize yourself with what is lead time and inquire about your suppliers’ lead times for delivering products to you.
How to Buy Name Brand Items Wholesale
If you want to stand out from the masses of wholesale businesses more easily, you may be interested in name-brand products. Doing thorough research on the products you want to sell and companies that supply them is crucial here.
Some wholesale directories offer established products through a wholesale marketplace. Websites like eWorldTrade, DHgate, and Tradewheel are some well-known directories. Take your time in researching suppliers and understanding their expectations so you can get off to a good start.
Remember that the more specific and branded products get, the more likely a supplier is to have stringent licensing agreements. Name-brand wholesalers may require you to have a proven selling history or certain monthly volume before they partner with you. Selling name brand goods can be a lucrative subscription box business model if you’re interested in kitting.
Do I Need a Wholesale License to Buy Wholesale?
If you’re wondering, “Do I need a wholesale license to buy wholesale?” The short answer is yes. Different states may call wholesale licenses a reseller’s license, reseller’s permit, a wholesale ID, or something similar.
There are a few reasons wholesale licenses are required for businesses:
- It allows suppliers to know who they’re working with. It’s much harder to control supply and demand when unregistered individuals are buying at random.
- The government requires businesses to adhere to tax laws. If a business isn’t registered on paper, this can be considered tax evasion (among other concerns) and will be punishable by law.
- It encourages positive relationships on both sides of the supply chain. Getting a license makes you a known business entity. This means both you and your supplier can adjust your workflow to mutually benefit your business outcomes.
The only legal way to buy wholesale without a license is if you’re a consumer. If you’re a customer of a business that resells wholesale goods to the public, this is not a problem. There are hundreds of wholesale businesses that simply import goods and turn them around at a profit.
How to Become a Wholesale Buyer
Becoming a wholesale buyer is a relatively inexpensive and fast process, but it does require doing your homework and covering startup costs. Here’s how to become a registered wholesale buyer:
- Get your employer identification number (EIN). This document shows the government you’re a real company doing business. You can’t begin selling products or hiring employees until you have your EIN, so make this a top priority.
- Acquire a sales license. This legally permits your business to make sales. The fee and application process differs based on where your business operates.
- Obtain your sales tax ID. A sales tax ID will vary state by state but is required for any business. The government approves a business to collect and submit state taxes based on this information.
- Apply for a wholesale license. Each state has slightly different requirements for wholesale resellers. To learn how to get a wholesale license, go to your state’s tax or revenue website and fill out the reseller application. Typically there is a fee associated, so be prepared for that.
Once all of these steps are complete and your application has been approved, you’ve become a registered wholesale buyer! You can now start contacting suppliers, developing relationships, and helping your business thrive.
How to Buy Wholesale Without a Business
When researching how to buy wholesale without a business, there are at least three scenarios you may come across:
- Buying wholesale as a reseller without a sales ID or EIN
- Buying wholesale as a reseller with a sales ID or EIN but no registered business
- Buying wholesale products as a consumer
Each of these circumstances implies different actions and outcomes. In the first scenario, a businessperson is purchasing goods that they sell without the government’s knowledge. In the second scenario, a wholesaler is selling goods with some of the legal paperwork filed but not all. In the third scenario, a customer is buying wholesale goods for their own private use.
The most common (and only legal method) of these three scenarios is the third, buying wholesale products for personal use. You can find businesses that sell wholesale goods to the public through a variety of methods. These include searching through a B2B online marketplaces and online marketplaces, checking local event listings, browsing online forums, and asking friends or family for references.
Here are just a few popular sources of wholesale goods:
- Rose Wholesale
- American Freight
- SS Activewear
- Trade shows
- Craft fairs
- Local events
- Farmers’ markets
- Mom and pop shops
How to Buy Wholesale for Resale
Knowing how to buy wholesale for resale is nearly the same process as buying general wholesale. There’s paperwork to fill out, business relationships to develop, products to acquire, and inventory management to enact.
The main difference between buying wholesale goods for your use and buying wholesale for resale is the reselling permits involved. If you work with a successful, popular supplier, these companies often have more stringent requirements than up-and-coming suppliers.
Your reselling permit likely includes information about the markets you can sell direct to consumer, what types of products you can sell, and sometimes the volume of products you’re allowed to sell. Make sure prospective suppliers answer all your questions before you sign on as a reseller. The supplier you partner with is a pivotal moment for your business.
Use the following steps to guide you as you prepare to sell:
- Confirm that your business paperwork has been approved by your state’s governing bodies.
- Review the products you’re selling and confirm supplier contact information.
- Draft or finalize your budget and double-check that sales forecasts are realistic.
- Confirm that your storefront, website, or both are prepared for sales.
- Get your B2B marketing or DTC marketing plan in place and start reaching customers.
- Strive for a high fill rate. This means you're able to ship products to customers on time, at all times, without resorting to backordering or having to pre order.
Buying Wholesale Is a Great Deal
Once you have the paperwork completed and a buying process figured out, making wholesale sales becomes rather exciting. You have a wide degree of control over the products you resell and your wholesale marketing plan. Use these steps to start or grow your business and reach new customers. You can even test them out for a new dropshipping venture.
Frequently Asked Questions About Wholesale Products
If you want to build a wholesale business, it’s important to have a firm understanding of the products you want to sell. Learn more about buying and selling wholesale with the commonly asked questions here:
Is it legal to buy wholesale and resell?
Yes, it is legal to buy wholesale and resell. In order to do so, you must have a wholesale license and a business license that corresponds with your type of company.
For example, if you only sell online, you’ll need an eCommerce business license. If you sell in a brick-and-mortar location, you’ll need a retail license of some kind.
Make sure you also have an employer identification number or federal tax ID. This is how the government tracks your business income and assigns taxes accordingly.
How do you qualify to buy wholesale?
In order to buy wholesale you must have a wholesale license. This is important for a couple reasons.
One, it shows manufacturers, retailers, and the government that you’re a lawful dealer of wholesale items. You’re a known entity that’s doing business in an ethical manner.
Two, it reduces and often eliminates sales tax. Most governments treat the expense of a wholesale license as a replacement for sales tax, which eliminates per-unit taxes (which add up quickly).
Is Amazon a wholesaler?
Amazon is not a wholesale company; they are a B2B and B2C online retailer. Companies that offer goods on Amazon either manufacture their own products, or purchase from wholesalers and sell them to consumers.