If you’re new to buying wholesale merchandise for resale, it’s good to get ahead of the game and know the best tips. Read on.
Buying wholesale merchandise for resale is one step of many required to run a successful business. Understanding the wholesale industry is crucial. Wholesale companies offer discounts that increase as the number of items you purchase increases. Some refer to it as buying in bulk. If you learn what it takes to become a master wholesale buyer, you will feel like you hit the jackpot, with the rewards being higher profits and happy customers.
What Does It Mean to Buy Wholesale Merchandise for Resale?
As a retailer, you have options for purchasing items to sell in your store. You can buy directly from a manufacturer where the products are made and distributed. You can buy directly from a local artisan, liquidator, importer, etc. You can also work with a wholesaler.
Wholesale companies buy large quantities of merchandise from a manufacturer. Because they purchase in bulk, they receive great discounts. Buying in bulk allows a wholesaler to make a profit by marking up the price of each product and reselling it to you. The good news is that even though they marked up the cost, they can still offer you a similar discount plan.
Your bulk purchase costs much less than if you were to purchase items elsewhere. Then you get to mark up the price of the products based on your desired profit margins. Everyone wins, including your customer. The savings you get by working with a wholesaler can be passed down to your customers.
While this sounds like a simple process, there are some tips and tricks you can do to ensure success when buying wholesale merchandise for resale.
Tip: Establish a Good Relationship with Your Wholesaler
It’s easy today to log in online, place an order, and log out. Technological advances give you access to suppliers worldwide, and you can stock your shelves in minutes. However, there are benefits to building a good relationship with your wholesale supplier representatives.
Suppliers have information that can give you an edge over competitors, like new trends and upcoming promotions. The more they know about your business, the more they can do to help you succeed. A positive relationship can help you negotiate deals, like shipping costs.
Ways to build a relationship with a wholesaler is to visit them in person when possible. If they are too far away for a visit, engage in virtual meetings. Find ways to meet face-to-face when you can.
Tip: Know Your Numbers
Owning a business means you must know things like expenses and revenues. There are many other numbers to know when buying wholesale merchandise for resale. For example, gross, net, and operating profit margins. Formulas exist to make it easier for you. If you want to know the gross profit margin, subtract your cost of goods from net sales. If you want a percentage, divide it by net sales.
You also need to know price points, cash flow, equity, debt, taxes, and storage space, to name a few. Also, you must know how many items you need before shopping to prevent overspending.
Tip: Double Check the Trends
Your wholesale supplier can give you an inside scoop from the designers and manufacturers about upcoming trends. However, don’t just take their word for it. Verify that the information you are given matches the information provided by the major players in the industry. If you are reselling clothing, you want to check out the websites of Vogue, Trend Zoom, Glamour, and more. Follow your favorite trendsetters on social media. Attend fashion shows virtually or in person. It is ultimately up to you to ensure your customers access the newest products.
Tip: Never Compromise Quality
Wholesale merchandise should not be low quality, no matter how big the discount. Before you make a bulk purchase, as the wholesaler for a sample product, if they don’t send samples, ask them about small-batch buying. You may be able to negotiate a lower price on your first order since it is essentially a test run to verify quality and get your customers’ responses.
When inspecting a product for quality, look at seams or joints to see if they are sturdy. Stretch, poke, pull, and handle it to see how it holds up. Do all the parts line up as they should? Do they look high-end or cheap? Do the color look vibrant, or are they fading or bleeding? Follow your instincts. If your initial reaction is that it is not high quality, don’t spend time talking yourself into buying it. Instead, find a wholesaler with your kind of quality products.
Tip: Read the Fine Print
Before signing a contract with a wholesale supplier, please read it. Please read all of it. You do not want to make a costly mistake that wipes out your profits. Check for hidden fees, such as late charges for missed ordering deadlines, upgraded shipping costs, or costs for returning products that arrive with damages.
If a wholesaler does not require you to sign a contract, you still want to research the company’s “fine print.” You can read social media comments, social media reviews, and website reviews. You can even ask for references from former and current customers who can answer all your questions.
Tips and tricks for buying wholesale merchandise for resale can be used as guidelines or steps to help you run your business effectively. While there are too many suggestions to include here, below is a brief list of tasks you must not forget to complete:
- Establish your business legally with permits, and licenses from your town, county, and state
- Keep your customers in mind when making purchases
- Maintain the mission and vision of your brand
- Stay focused on your niche
- Network with other retailers online or at trade events
- Invest in software that makes buying and selling wholesale merchandise easy
- When you make a mistake, like every other retailer on the planet, correct it and move on
Finally, have fun. Buying products that make your customers feel good will make you feel good. Enjoy the process.