Starting an ecommerce business requires making many important decisions, one of the biggest being where you will source your inventory. You have a few options – buying handcrafted goods directly from artisans, working with manufacturers to produce custom white label products, or purchasing pre-made goods in bulk from wholesalers. This article will focus specifically on finding, evaluating and partnering with wholesale suppliers to grow a profitable ecommerce business.
What is a Wholesale Supplier?
A wholesale supplier acts as a middleman between manufacturers and retailers. They purchase large quantities of products at a discount directly from the manufacturer, then sell to business owners at a slight markup. The businesses can then resell the products to consumers for a higher price, keeping the profit margin.
Partnering with the right wholesaler provides small ecommerce businesses the flexibility to choose from a wide selection of pre-made goods to resell, without handling manufacturing logistics. However, wholesale may not be the best fit for those wanting tighter control over product development.
Is Wholesale Right for Your Business?
Before seeking out wholesale suppliers, make sure the model aligns with your business goals. Important factors to consider include:
- Product category – Wholesale works best for selling pre-made goods across many niches, from clothing to electronics to beauty products. For highly customized items, manufacturing may be better.
- Order quantities – Wholesalers require minimum order volumes to receive wholesale pricing. Make sure you have enough demand and resources to sell larger order quantities profitably.
- Warehouse space – Wholesale requires more physical inventory. Ensure you have enough space to store and organize it efficiently.
How to Find Reputable Wholesale Suppliers
Once you determine that wholesale suppliers fit into your ecommerce strategy, here are some tips for finding the best partners:
Start by Defining Your Product Selection
First, decide on the types of products you want to focus on. Browse supplier catalogs and wholesale directories like SaleHoo to get a sense of your options. Make note of where supplier inventories overlap with the niches and categories you want to specialize in.
Use Reverse Sourcing to Find Proven Sellers
Reverse sourcing entails starting with trending, high-demand products, then finding wholesalers who supply them. Check best seller lists on major retail sites, then use resources like the Amazon supplier network to locate wholesalers carrying those exact items. This helps minimize risk of low-selling inventory.
Consider Logistics Like Delivery Times and Warehouse Proximity
Choose suppliers who can integrate well with your business model in terms of inventory storage, transportation, and overall logistics. Opt for wholesalers located closer to your warehouse facilities to reduce shipping costs and delays. Ask about average delivery timeframes so you can set accurate customer expectations.
Inquire About Minimum Order Quantities, Pricing, and Fees
Wholesale pricing comes down to several factors – the volume you order, membership fees, cost per unit, and more. Make sure to thoroughly understand the pricing structure and get fee details in writing so unexpected costs don’t eat into your margins later.
Do Your Homework with Reviews and Referrals
Vet potential suppliers thoroughly. Search online for reviews and complaints, and ask for referrals from fellow business owners. This helps avoid partners with quality control issues or poor customer service.
Evaluating and Initiating a Wholesale Supplier Partnership
Once you’ve narrowed down your wholesale supplier options, here are some best practices for initiating and maintaining a successful business relationship:
- Request samples to assess product quality. Does it align with your brand standards?
- Negotiate order minimums and per unit pricing if the initial quote doesn’t work with your budget. Most terms are flexible.
- Provide your business license and tax ID so suppliers can verify your legitimacy.
- Understand return policies in case any inventory is defective or damaged.
- Use profitability calculators to confirm ordering wholesale inventory at proposed rates will be financially viable.
Finding the ideal wholesale partners takes research and due diligence. Taking the time upfront to thoroughly vet suppliers will set your ecommerce business up for sustained success.
Pick the Right Ecommerce Fulfillment Method
Your inventory sourcing strategy will influence your fulfillment methods. Here is an overview of popular order fulfillment options for wholesale-focused ecommerce businesses:
- Fulfillment by Amazon (FBA) – You ship products to Amazon warehouses and they handle storage, picking, packing, shipping, and customer service.
- Dropshipping – Suppliers ship orders directly to customers. This removes warehouse needs but gives up branding control.
- Fulfillment by Merchant (FBM) – You store inventory and handle packing and shipping orders yourself. More work but higher margins.
Look at costs, margins, branding, and workload to pick the model that best supports your wholesale sourcing and overall business goals.
Key Takeaways
- Wholesalers allow small ecommerce businesses to source inventory from a catalog of pre-made goods. This provides more flexibility compared to manufacturing.
- Take time researching to find suppliers with competitive wholesale pricing, quality products, and good logistics.
- The right fulfillment model depends on factors like where you source inventory and how much branding control you want over the customer experience.
With the right wholesale partners and strategic fulfillment choices, your ecommerce business can efficiently scale and reach new levels of success.