E-commerce is a booming industry nowadays. Drop shipping and wholesaling had made this easier as third-party providers can handle the processing and delivery of the goods as the drop shipper sleeps. Although this paints an easy picture, you still ask, what do I need to start a wholesale business online? Of course, you need to have a background in sales. This is learnable and with tons of business boot camps, there’s no excuse not to jumpstart your planned investment.
If you’re into wholesaling, there’s a green pasture awaiting you. That is if you get a trustworthy supplier and you have a network of retailers to patronize your products. Just remember that you’ll be in charge of the processing of the orders, delivery, as well as the inventory and storage of the goods.
Basically, these are the things you need to start wholesaling:
The capital needed for an online business depends on the scale that you’re planning to start out with. If you want to go big right away, you can consider buying a wholesaling business from another owner. This may cost you millions of dollars in the process. On the other hand, you can invest for as low as $700 to acquire closeout products and sell it to certain retailers. From there, you can climb your way up and add more capital for bigger product purchases.
Assess first your financial capability. Can you invest a certain amount without breaking the bank? Can you afford losing a part of that money in the process? Investing your entire retirement fund won’t be a smart move here if you’re asking what do I need to start a wholesale business online.
The items you’re planning to sell would also affect your potential capital. If you choose to wholesale car parts, you may need to shell out more than $700. But if you’re into closeout deals for office and school supplies, your one grand can be a good start already.
In the supply chain, the wholesaler looks for a distributor to acquire the products. These agents are the one dealing with factories and manufacturers to acquire the products to be potentially sold to wholesalers. The items will then be sold to retailers for individual purchases by customers.
You can also directly purchase your goods from the factory. For example, if you’re selling shirts, you can partner with a manufacturer that can deliver the bulk goods from their factory to your storage area.
Office and personnel
One important aspect is to have an office your retailers can visit for personal placing of orders. This will also be easier for your business to be contacted by new buyers. Additional personnel would also be needed if your business is expanding. The processing and delivery of the orders would surely require more hands. However, this will add up to the operating and capital cost since you’ll be paying for the salary of your employees.
On your office, you should have a telephone, fax machine, and personal computer. These are necessities to keep up with orders and inventory if you’re still asking yourself what do I need to start a wholesale business online.
If you want to make it big, having a website will definitely make a massive difference. Many retailers will refer to online listings for their purchases and if you have your own domain, you stand a higher chance of being the candidate.
Most wholesaler websites are mere product listings. It will help to segregate your goods into categories if you’re a wholesaler of diverse products. In case you have a specific niche, take time to indicate specifications and make your e-commerce platform presentable. Having a webstore is a big advantage too.
Unlike drop shipping, you will have to purchase the orders in bulk even before retailer orders are in place. This means that you’ll have to rent or buy a storage space to secure your product. Such thing is a crucial point as it entails the security of the goods and the maintenance of its quality.
What do I need to start a wholesale business online? Inventory.
Inventory always matters. Most companies maintain the least possible amount of unsold inventory to reduce the risk of financial losses. They only purchase what the retailers ordered or an amount that they think they can sell in a specific timeframe.
However, failing to stock up may result in selling out even if there’s still consistent demand. The key here is avoiding stocking an inventory for more than 90 days so you can have more turns on your investment. The more turns you have, the more profit you gain.
Wholesalers have to market their products to retailers. One thing you should know is that there’s high competition in the wholesaling industry. Choosing a low competition product would help but this also means there are fewer retailers and buyers.
If the market is saturated with plain t-shirts, try selling ones with sublimation printing. This will help you stand out but always be mindful of the risks that it entails.
A few reminders
Before you start your online business, it’s important that you shouldn’t panic buy inventories. Know the pulse of the buying market and purchase only what you think you can sell. Unsold inventories mean that your capital and profit are in the waiting line. There’s no assurance that you can get it back.
Seasonal products and short-lived products are risky investments. There are only specific times of the year where you can have the chance to sell it, and still, the market is flooded with the same thing. If you think this is profitable, invest an amount that won’t hurt your business too much.
You should also know something about profit margin. This is the price of the product when you bought it and when you sell it to a retailer. Always have a pulse on the market price to have a win-win situation for your patrons.
What do I need to start a wholesale business online? These points are just some of the things you should know for starters. Do you have something to share? Ping us below!