If you’re a tradie or small business owner, getting the best value for your money is essential to staying afloat. Of course, this involves understanding the specific needs of your business, and the ongoing business costs. Only that way will you be able to make smart buying decisions. Most of the time, this involves finding the right trade supplies from wholesalers. This is how most retailers operate. Wholesalers are the best source of finding the right products for your business, and as your business grows, so does your relationship with them. Most of the time, wholesalers are flexible enough to provide the extra bit of support you need to make your business grow.
Buying trade supplies from a wholesaler can be confusing initially, and this article should clear up quite a bit of confusion. I’ll teach you how to start out, how to find the right wholesaler, and how to get the best wholesale prices.
What Does Buying Wholesale Mean Anyway?
Wholesale is how most businesses buy their products. Wholesalers are basically the middlemen between the retail store and the manufacturer. Wholesale purchases are always made in bulk, which is why you pay a lower price for them. After buying from a wholesaler, you can sell the products at a higher price for profit. The higher price is the price you see at retail stores, and what customers pay when shopping at your store, or using your service. This is because the retailer takes on the costs of buying and storing wholesale items, as well as great customer service. The difference between wholesale and retail prices is known as margin, which is the profit the retailer makes from making a sale.
How to Price Wholesale Items for Resale?
In order to properly price wholesale items, you need to consider the gross profit, which is the revenue you’ll make minus the costs of the goods sold. The cost of goods sold includes the costs associated with manufacturing and selling goods. Fixed costs aren’t accounted for in gross profit calculation. Since you’ll be buying from a wholesaler, your cost of goods sold is the price you pay for the products. The gross profit, on the other hand, is the money you make off of selling those products.
Generally, retailers markup the price so they can make a profit. So, if you buy a box of fasteners for $2 and sell them for $5, the markup is $3, and the gross profit is $3. That being said, if your wholesaler’s prices are high, it will impact the profitability of your business. Additionally, the prices you offer should be consistent with the market you cover. Nowadays, it’s easier than ever to find better prices online.
How to Find a Wholesaler?
There are a few different ways to find wholesalers, but the most common two are approaching them individually, or working with a B2B wholesale marketplace. Worth knowing is that wholesalers come in different sizes. Some work with retailers only, while others work with customers themselves. The type of wholesaler you want to work with depends on the type of stock you need from them, the niche you fit in and the types of relationships you build.
Some manufacturers operate as wholesalers, and buying directly from them can net you better prices. However, that’s not always possible, and oftentimes, it isn’t the most convenient option. There are also retail wholesalers, who sell products in bulk at a small markup from manufacturers. This allows you to buy products from multiple manufacturers. Lastly, B2B wholesale marketplace options are the most convenient option, where you can browse and order products online.
How to Choose a Wholesaler?
Put together a list of wholesalers you’re considering. Google them and read through reviews from other businesses that have worked with them. This will give you a good idea of whether you should reach out to them or not. Next, narrow down your list to a few choices, and ask them the following questions:
What Are You Selling?
You might be selling a broad range of products or you might be selling a couple of specific items. Regardless, you have to choose wholesalers that have the products you need. You can work with multiple wholesalers to get the range you want. However, it’s important to keep your brand consistent.
What’s Your Price Point?
At the end of the day, you’re selling products to make a profit. When choosing a wholesaler, make sure you get a price that allows you to hit your wanted profit margin.
Are They Reliable?
You don’t want to work with people you can’t rely on. Wholesalers who aren’t on time, fail to deliver or consistently provide damaged goods aren’t good for your business.
What’s Their Customer Service Like?
Make sure the business you work with has a reliable customer support team you can reach out to when needed. If you have to put in a lot of effort to have your concerns addressed, you should consider a different wholesale partner.
