Establishing yourself as an online wholesaler can be tough. When you’re not sure where to begin, landing your first wholesale order may seem downright impossible. What’s more, your traditional experience in sales might not translate to the unique world of buying and selling in bulk.
Fortunately, if you follow a series of strategic steps geared specifically towards wholesaling, you’ll be more likely to break into the industry with ease. By choosing the right product, connecting with manufacturers, and setting smart wholesale prices, you can make it over the hurdle of that first sale.
In this post, we’ll cover the basics of wholesaling and why you may want to start this kind of business. Then we’ll provide you with six simple steps that can help you land your first wholesale customer. Let’s dive in!
An Introduction to Wholesaling (And Why You Should Start!)
In the wholesale model, a middleman purchases a large quantity of a product directly from the manufacturer, receiving a bulk discount. Then the wholesaler resells the product to one or more retailers at a slightly higher price to earn a profit. Finally, the retailers sell the product at a markup to their customers.
For wholesaling to work, a few things need to happen:
- The wholesaler needs to buy in bulk to receive a good price.
- The wholesaler needs to add value or convenience as a middleman (otherwise the retailer can just buy directly from the manufacturer).
- The retailer needs to be able to sell the product at an additional markup.
The key to successful wholesaling is moving a large quantity of products. In order to make a profit, the wholesaler needs to negotiate a good purchase price by buying in bulk, and then sell all of that quantity at a higher price.
This may sound a bit complicated at first, but it can be quite lucrative. Once you find opportunities in a market, your success can build on itself. You may find new business partners or gain loyal wholesale customers who repeat large orders.
How to Get Your First Wholesale Order (In 6 Steps)
The hardest part of wholesaling is often getting started, especially if you don’t have much experience or many pre-existing business connections. Therefore, planning and preparation are key to minimizing risk and making that all-important first sale. Here are six simple steps to help you do just that!
1. Decide what product(s) to sell
It may seem like there are an infinite number of viable products you can wholesale. To cut through the noise, it’s best to look for opportunities in your niche and narrow down the possibilities.
A good strategy to get started is to make a list of 100 ideal companies that you would like to earn business from. This may be a bit challenging, but it is a highly useful exercise. It forces you to get creative and consider products you may not have thought of otherwise.
It’s also wise to assess the possibility of working with products or topics you have pre-existing knowledge about. For example, if you like to shop for clothes and have a strong sense of fashion, wholesaling clothing could be a good option. Your expertise in brands, fabrics, and styles can make it easier for you to source quality products and sell them to retailers.
No matter what you decide to sell, you’ll want to be sure there is market potential before you invest. You may know a lot about camping gear, but if there are tons of successful outdoor supply companies, you’ll likely have trouble getting a slice of the market. On the other hand, if none of those outdoor supply companies offer a certain in-demand product, you may have found a solid opportunity to capitalize on.
You’ll also need to be aware of the logistics involved in your wholesaling operation. You may need to store or transport the product in large quantities, or alter the original packaging for resale.
If you do not have the ability to store or transport products (or if it would be too expensive), dropshipping may be the way to go. Either way, you need to understand the product, the retailer, and the ideal consumer at the end of the road to orchestrate a lucrative wholesaling operation.
2. Create clear and fair terms
A wholesale purchase agreement can be a relatively simple document in terms of business law, but it’s still crucial to get it right. Local jurisdiction for your particular products will determine the finer details, but you’ll want to make sure your wholesale agreement includes the following:
- The product and quantity being exchanged
- The current and new owner
- Details about the product (such as condition, variety, and other standards)
- Terms in the event that these standards are not met
- Shipping times, costs, and arrangements
- Price and payment method
- Terms in the event that payment is not successful (i.e. late fees)
- Applicable fees and taxes and who is responsible for them
- Conditions and limitations of the agreement, including default policies
You may want to include additional details, but this framework covers most of the essentials. Keep in mind that you would be wise to pay close attention to your wholesale pricing terms in particular, as these should be clear from the start. For example, it’s best to be upfront about terms such as minimum order quantity.
3. Connect with retailers and manufacturers
Once you have established your wholesale agreement, you can start reaching out to manufacturers and retailers. Each will require a slightly different approach.
Making a deal with a manufacturer to buy their product is typically the easy part. That’s because they usually want to sell as much as they can. Still, you may have to compete with other companies for supply and pricing. You’ll need to get the product at a low enough price that the consumer at the end of the road is still willing to buy it, even after both you and the retailer take a cut.
Striking a deal with a retailer can be harder. Other companies may be competing to provide the same or similar products, and the retailer can theoretically buy straight from the manufacturer to keep your cut for themselves. That’s why it’s essential to provide some benefit as the middleman. This can be better pricing, streamlined logistics, or just convenience.
For example, if a retailer is currently buying gummy bears in small quantities directly from the manufacturer, they may not be getting a bulk discount. If you can buy those same gummy bears in bulk for a 10 percent discount, you could then store them and distribute them in small quantities to the retailer for 5 percent less than they are currently paying, netting a 5 percent profit for yourself.
The above example assumes that you have the money to invest upfront, the space to store the bulk quantity, and the ability to sell all of the product before it expires (if relevant). In this scenario you would be benefiting the retailer by offering better prices. Other examples of benefits could be faster delivery from a local warehouse (logistics) or handling the delivery schedule from the manufacturer (convenience).
The bottom line? You need to give wholesale customers a reason to buy from you over your competition or the manufacturer. When you do, you’re more likely to successfully attract customers and build lasting wholesale partnerships.
4. Establish your wholesale prices
While it’s not the only factor, your pricing strategy is perhaps the most important aspect when it comes to wholesaling. Setting the appropriate wholesale rate is key.
Once again, you’ll want to consider your overhead costs in addition to the price you buy and sell at. That way, you can ensure that you are actually coming out ahead. Competitive margins might help you get a sale, but if the costs of operation eat up that profit, you might be left with nothing to show for your hard work.
Dropshipping, which arranges shipments straight from the source to the buyer, is a great way to avoid a lot of overhead. Otherwise, you can expect to pay for a warehouse to store products, delivery services, and wages for you and your employees.
Wholesale Suite offers a price calculator that can help you determine ideal wholesale prices and sales quantities to meet your goals. Once you have the numbers figured out, you can reach out to manufacturers and retailers with your wholesale model to see if it’s advantageous to them.
5. Make it easy to purchase your wholesale products
Running an online wholesale store can be quite complex. If you’re not organized, managing your wholesale pricing, orders, and shipping can become a major headache. In the worst-case scenario, you may even scare off potential customers with a confusing website.
Therefore, you’ll want to make sure your WooCommerce store and systems are ready for your first sale. Ideally, you’ll have a great recruiting page where your wholesale customers can register. You should also make sure your product list is organized and straightforward.
Ultimately, you’ll want to make it as easy as possible for your customers to make a purchase. Using premium software such as our Wholesale Suite plugin can help streamline your order process from the start. That way, getting your first wholesale order is fast and frictionless.
With our tool, you can easily set your wholesale pricing and process wholesale orders all in one place. You can also utilize more than 100 features, which include shipping mapping, multiple user roles, tax displays, and more.
6. Market your wholesale products
You can greatly increase your chances of converting a new customer with a bit of marketing. As you’ll recall, it’s important to highlight your value as a middleman.
Through your website copy, you should highlight how you can save your customers time and money. The best place to do this is front and center.
For instance, you may want to remind users that you offer free shipping or convenient payment methods. You can even use your website header to advertise an incentive such as a first-order discount. You’ll also want to find ways to make your business memorable, such as by calling potential customers who may need a little nudge to take the leap.
Breaking into online wholesaling can be challenging. It’s distinct from regular e-commerce sales, and if you’re not strategic in your efforts, you may have trouble finding your first wholesale customer.
However, if you follow these proven steps and make use of the right tools, getting your first wholesale order should be a breeze:
- Decide what you want to sell.
- Set your wholesale agreement terms.
- Connect with manufacturers and retailers.
- Set your wholesale pricing.
- Make it easy to buy your products.
- Market your wholesale goods.
Do you have any more questions about getting started with wholesaling? Let us know in the comments below!