You've gone through the legalities of forming and licensing your retail business and you are now taxed with the responsibility of finding good quality inventory at the best price possible. According to a study conducted by First Research, there are currently 330,000 wholesale distributors registered in the U.S. alone. It is important to know exactly what you're buying and whom you're buying from.
The Business of Wholesale
The wholesale industry is multifaceted and highly complex. Wholesalers deliver goods to retailers through various distribution channels and supply chains. Atop the supply chain is the manufacturer (exclusive distributor). The manufacturer sells product in bulk to the wholesaler (also known as brokers, jobbers, or regional distributor) and the wholesaler in turn warehouses the product and sells directly to businesses.
Work Your Way Up
Most high-volume wholesale distributors are more apt to work with businesses that can engage in economically favorable transactions. The more inventory you can purchase, the more willing they are to sell to you. Challenges arise for the new small retail business owner, as their sales volume isn't yet high enough for larger distributors to justify working with them.
You may have to start with smaller wholesale companies, which oftentimes means smaller profit margins. However, as your sales increase, you'll build enough capital, which will provide you with the power to negotiate lower rates.
Conducting Research and Building Relationships
Though this may seem like a challenging task, there are a number of ways to connect with wholesale distributors; you simply have to know where to look.
Resources: Wholesale Sector Industry Profile conducted by First Research