If you are a retailer, whether it be a storefront or an online business, it is important to find legitimate wholesale distributors or manufacturers to supply the products you intend to sell. Unfortunately, there are a lot of businesses, especially online, that claim to be wholesalers but are not legitimate wholesale distributors. People familiar with the wholesale business have stated that up to 98% of all of the search engine listings for wholesalers and drop shipping companies suppliers are not true wholesale distributors or manufacturers. Failing to discern between true wholesale suppliers and scams can mean the difference between making a profit or losing money.
So how can you discern whether a business is a true wholesale distributor? One tell-tail sign of a non-genuine wholesaler is that they profess to sell products at wholesale prices to the general public. True wholesale distributors will not sell you products unless you have a resale certificate. In some states, this certificate is called a wholesale license. Your business must apply for a resale certificate in the state in which you do business. Once received, you can purchase ingredients, parts, or finished products without paying sales tax as long as they are purchased for resale and not for personal use.
Legitimate wholesalers will require you to apply for a wholesale account. Part of the application process is showing proof that you are a true retailer and not just a person trying to buy wholesale or trying to avoid sales tax. Wholesalers are required by law to document all wholesale sales. Your retail certificate demonstrates that your business has been vetted by your state. This document also allows wholesalers and manufacturers to sell you products without collecting and paying sales tax.
Another common feature of true wholesalers is that they often have a minimum initial order size requirement. Many wholesalers do this because they only want to deal with businesses that intend to do meaningful business. This requirement does not always mean that your orders have to be greater or equal to the size of the minimum initial order. Many times, in the beginning you can put an amount of money equivalent to the initial minimal order on deposit. If they’re a drop shipping, it allows you to tailor orders to your customer’s needs without having to take shipment, dividing the inventory and re-shipping it.
Be very cautious of any business posing as a wholesalers that requires a monthly fee to do business with them. True wholesalers don’t charge membership fees.
One very effective way to find legitimate wholesale distributors is to contact the manufacturers of the products that you are interested in selling. When you call them, ask for a list of wholesalers that they do business with. You can also ask if you can set up a wholesale account with them. They might be willing to do this if you can throw significant business their way.
Trade shows are a great way to connect with a lot of manufacturers and wholesale distributors in one place. Be aware that in most cases, you will not be allowed to attend trade shows unless you have a retail certificate.
Another way to find manufacturers and wholesalers is to purchase a supplier directory. These directories contain a database of wholesalers organized by product or market. In most cases, businesses listed in these wholesaler databases have been screened to verify that they are true wholesalers. Examples of supplier directories include Worldwide Brands, Quick Stats and SaleHoo.
You can use internet search engines such as Google or Yahoo to find wholesalers and drop shipping suppliers. The only problem with this approach is that your search will turn up more scams than legitimate suppliers. One way to sort out the fake wholesalers from the legitimate ones is by checking if they are in good standing with the Better Business Bureau Online Reliability Program. Checking to see if a wholesaler is an eBay Certified Solution Provider is also a good way to verify they are legitimate.
In summary, if you retailer, it is critical to find manufacturers and wholesale distributors that are legitimate and will sell you products at a wholesale price and not charge you sales tax. There are a number of ways to find these wholesalers. One website you should consider in your search for suppliers is NewBusinessMarket.com. On this website there are companies that are looking for wholesalers, and retailers interested in carrying their product line. Another website I would recommend for promoting sales is WebTrialOffers.com. This website has buyers who are actively searching for web promotions. These people are motivated buyers, selecting from categories of products or services, entertainment options and website content. On this site, you can present the benefits of your product or service using narratives, pictures or movies. Online coupons and promotional codes can also be offered.
Written by: Mark J. Krupp, Cofounder of NewBusinessCreator.com