So, you're diving into the world of retail? One of the initial puzzles to solve is where to get your products from. Basically, you're looking at buying stuff in bulk from wholesalers.
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Most retailers don't manufacture their own goods. Instead, they rely on wholesalers to supply them. These wholesalers aren't just handy for stocking your shelves; they can also adapt as your business grows.
Buying wholesale might feel like stepping into the unknown at first. That's why we're here to share some pointers on how to kickstart this process. We'll cover everything from finding wholesalers to snagging those wholesale prices.
Here's what we'll dive into:
What exactly is buying wholesale?
Where to find wholesale suppliers
How to pick the right wholesale products
Tips for purchasing high-quality products in bulk
Any other key things to keep in mind when buying wholesale
Let's get started.
What does buying wholesale mean?
Ever wondered how businesses get their hands on the products they sell? Well, there are two main routes: Wholesale vs retail. When you opt for wholesale, you're essentially cutting out the middleman between your store and the manufacturer.
Wholesale purchases usually mean buying in bulk, and because of that, you snag a discounted price. Once you've got your goods from the wholesale companies, you can sell them in your shop or online store at a higher price to turn a profit. That higher price? That's what we call the retail price ' what your customers pay when they shop with you. They're cool with paying more because you're handling all the logistics, from buying and storing wholesale items to providing top-notch customer service.
Buying directly from manufacturers can be tempting since it cuts out even more middlemen, potentially lowering the cost per unit. But here's the catch: manufacturers often sell in huge quantities, which might not be feasible for smaller online retailers. Plus, they might not offer the same variety as wholesalers.
So, which route should you take? It all boils down to factors like your business model, your products, your target market, and your financial situation. If you've got a killer product line and want full control over how it's sold and showcased, going the retail route could be the way to roll.
Wholesale vs retail
When it comes to buying from wholesalers versus retailers, each option comes with its own set of pros and cons.
Buying from wholesalers offers the advantage of a lower cost per unit, thanks to the fact that you get to buy in bulk and benefit from economies of scale. However, this route may require buying in large quantities, potentially leading to overstocking or tying up cash flow.
On the other hand, buying from retailers provides flexibility in purchasing smaller quantities but often at a higher cost per unit. The difference between the wholesale and retail prices is called the margin, representing the profit a retailer makes from a sale. Retail prices vary between businesses, and different pricing strategies can be employed to determine the best retail price for a product. Once the retail price is established, calculating the gross profit becomes straightforward.
Understanding how to buy wholesale in a way that works for you can help grow your business, establish strong connections, and satisfy your customers. According to the Global Wholesale Market Report, the wholesale market is valued at $48 billion, and that number is expected to grow to nearly $62 billion by . So there are countless opportunities to choose great brands, but it can feel overwhelming. We've compiled some of the most helpful information for new retailers when they're looking to start buying wholesale.
What is buying wholesale?
Buying wholesale means purchasing products in bulk to resell them at retail prices to consumers either online or in person. Since they're buying a large quantity of items at once, those who buy wholesale can get goods below their typical retail value and make a profit as they sell them downstream.
How do I buy wholesale products?
Before you start buying wholesale, think about what you need for your retail business. What's your starting budget for inventory? Do you plan to source your goods locally or globally? Is sustainability a priority for you? Do you want to stock only hand-crafted products? Come up with a checklist of your preferences before you start your search.
1. Sign up for an online wholesale marketplace.
For small retail businesses, online marketplaces can be the quickest, simplest way to find your perfect wholesale match. You can search by shopping category, price, geography, and other filters, and you can sort through user reviews. Some marketplaces require annual or one-time membership fees and others are completely free. On Faire, where account sign-up comes at no cost, you can connect with more than 100,000 wholesale brands.
2. Attend retail trade shows in person or online.
At retail trade shows, wholesale distributors and manufacturers exhibit their wares to retail attendees. By going to trade shows for your particular niche, you can discover brands and start making a list of contacts to reach out to directly. There are trade shows for everything from eyewear to jewelry to home decor, and they're a great starting point when it comes to building your network. Faire even offers virtual retail trade shows that you can attend from the comfort of your home. Skip the travel, get connected with more than 25,000 brands, and save money at the Faire Markets annual event.
3. Keep up with trade publications in your niche.
No matter what retail niche you're in, there's likely a trade publication for it. Do you sell fashion and apparel? Check out a textiles trade magazine like California Apparel News. Are you selling home decor items? Home Accents Today has the latest trends and insights. The advantage of keeping current with these magazines is that brands may advertise within their pages, and you can scoop up some under-the-radar distributors.
How can I pay for big wholesale purchases?
Placing a large wholesale order can be costly, especially for a new retailer. That's why Faire created the Open with Faire program. This exclusive offering for new store owners helps cover the cost of stocking up on inventory so you can save your cash for things like rent and payroll. Get up to $20,000 in inventory financing with 60-day payment terms'meaning you can stock up now and pay 60 days later.
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Not sure where to start? Aspiring retailers can visit Faire Academy for a helpful primer on how to open a store for the first time.
What certificates do I need to start buying wholesale?
Though requirements vary from state to state and you should check your local laws, there are a few must-haves for retailers before they can buy wholesale products.
Resale certificate: A resale certificate may also be called a tax exemption certificate or a wholesale license depending on where you live. It identifies you as a legal reseller and allows you to buy wholesale items without paying a sales tax. The forms for each state are different, and wholesalers may ask to see your certificate before they sell to you.
Seller's permit: In order to get the resale certificate mentioned above, you must already have a seller's permit. You need a seller's permit to legally collect sales tax from your shoppers.
Forms of identification: Wholesalers may want to see some type of I.D. before they can sell to you. That could be the tax ID number for your retail business or a driver's license.
Bank account information: Ideally, you'll have a bank account specifically for your business to pay your wholesale partners. Having a separate account makes tracking cash flow and keeping records for taxes easier.
What are best practices for buying wholesale?
Think about minimum order quantity. Minimum order quantity, or MOQ, is the lowest number of items you can purchase from a brand at one time. Instead of a product quantity, you may also see this listed as an order minimum with a dollar amount or as a case size, which is the multiple of which a given product is sold. If you see a wholesale listing for wool blankets and the MOQ is 10, that means you have to order at least that many blankets to work with that brand. If you're limited by a tight budget, paying close attention to MOQs is crucial.
Avoid overstocking inventory. Although it may be tempting to buy a surplus of merchandise when you find a good price, it's important to factor in inventory carrying costs. Inventory management software, like inFlow Inventory, will give you a real-time look at your stock levels. You can set reorder points for each product to ensure you maintain the perfect stock level. It can also track units of measure, so you can buy by the pallet and sell by the box.
Request merchandise samples. Before you place a large wholesale order, you'll want to ensure the quality is up to your standards (and the standards of your customers). If obtaining samples isn't possible, then find a brand with a low MOQ so you can start by ordering a smaller quantity before you fully commit.
Pay attention to industry trends. Do you know what Pantone's color of the year was for ? If you sell apparel, decor, and accessories, trends like those are good to know. (It was magenta, by the way.) As mentioned, trade publications are a great way to stay up-to-date with current and forecasted trends.
Understand lead time. A brand's lead time is how long it takes in advance to prepare and deliver your wholesale order. Depending on whether you're ordering locally or globally, lead times can vary greatly. For peak shopping periods like the holidays, lead times might be even longer, so it's good to buy early. The last thing you want is your New Year's Eve decor arriving at your shop ' on January 2. On Faire, brands list their lead times on their shop pages, and you can always send a quick message to ensure orders will arrive on time.
Buy from knowledgeable brands. The brands you work with should have expert knowledge about their product category. If you sell jewelry, choose a brand that knows the difference between materials like gold-plated and gold vermeil. Any vendor who can't answer simple questions about their products is not a good choice.
Don't forget about customer service. Even if the brands you choose have great products at a great price, that can be undermined by terrible customer service. Prioritize brands that are reliable, communicative, and attentive. If things go wrong with an order, it makes a difference to have great customer support that solves problems quickly.
How do I choose products to buy wholesale?
Do careful research on what products are popular and trending. Maybe wax candles are out and soy candles are in? Are dangling statement earrings all the rage or is it all about the petite huggies now? On Faire, you can shop by category and sort by bestselling products to home in on just the right items for your store.
In Faire's makeup category, you can easily sort the results by face, lips, nails, and eyes to find exactly what you're looking for.
Look through this section to find books, stationery, greeting cards, tabletop games, and even party supplies. Many of these brands create with handmade and even eco-friendly materials.
Find your store's perfect fit. Sort by sandals, boots, slippers, or loafers. You'll find a section for women and men, both of which also include makers of shoe care products ' a potential kitting opportunity for footwear that requires maintenance or protection (like leather).
Shop bands, wrist watches, and even pocket watches for any type of customer. Filter by color and material, as well as price and occasion for shoppers who visit your store with a specific budget or event in mind.
Browse trending brands section to see what's hot right now, from chunky gold to semi-precious natural stones. You can even browse by stone type for those customers looking to align their style with their birthstone.
Faire's apparel selection carries a wide variety of trendy finds, from wide-leg denim pants to button-down plaid. You can filter by different categories like activewear, dresses, maternity wear, and more.
Find furniture to suit your retailer's specific aesthetic. In the furniture category, you can explore vintage and modern pieces in all kinds of styles.
Score great wholesale prices on popular snacks, beverages, and pantry staples like Momofuku Chili Crunch or Poppi prebiotic soda.
This broad category caters to several different store types: Whether you sell to new parents trying to fill their nursery, or to toddlers who have finally outgrown their winter coat, you'll find your next stock here. In the toys and learning category, you can also browse educational puzzles, games, and children's books for all ages.
Whether your shoppers are into fanny packs, cross-body, or weekender bags, there are tons of options to explore, and for every season.
Finding the right brands and understanding what wholesale products to buy is the first step to building a thriving retail business. Taking the time to understand more about the wholesale business helps you avoid costly missteps and wasted time. So, ask strategic questions, do some research, and compare your many options as you start your wholesale buying journey. If you're a new retailer, read more about Open with Faire and learn how to apply for up to $20,000, with 60-day payment terms, to stock your new shop.
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