Chances are, whenever you’ve bought a product online, it wasn’t actually made or even sourced by the shop you purchased from. Businesses everywhere use wholesale distribution sources to purchase their products in bulk at a discounted rate and, in turn, sell them to you for a profit. Product supply chains contain multiple “middlemen” between the manufacturer and the consumer, and these middlemen are often wholesale distributors.
Simply put, a wholesale distributor is a person or company that purchases products in bulk quantities directly from the manufacturer and then redistributes those products, usually to retailers.
So what’s the difference between a manufacturer, a wholesale distributor and a retailer? All three are part of a supply chain and interact in different ways:
Each link in the chain sells the product for a slightly higher price than the last.
In basic terms, the wholesale distributor is a middleman between the manufacturer, who produces the products, and the retailer, who ultimately sells those products to customers. Wholesalers who deal in dropshipping will ship items directly to a customer, as dictated by a dropshipping seller.
Some distributors are directly linked to a manufacturer under the same company, while others are simply partnered with the manufacturers. Private wholesale distributors must maintain a keen sense of both the products available to them and current market trends.
Wholesale distribution begins with the idea of purchasing high-demand products at a low price. This low price is usually achieved by high purchasing volume. By purchasing in bulk, wholesale distributors are able to get a lower price from manufacturers, who are often not equipped to handle marketing and other aspects of retail sales.
In turn, wholesale distributors sell their goods, again in bulk (albeit likely smaller quantities), to retailers for a slightly higher price and keep the difference as profit. Wholesale distributors commonly work in industries such as furniture, electronics, office equipment, clothing and groceries.
At one time, wholesale distributors were used almost exclusively by retailers who needed to purchase products in bulk to fill the shelves of their stores. Retailers seek out wholesale distributors to provide them with bulk quantities of what they need, and have their orders shipped to them to keep in stock, whether it’s for a brick and mortar shop or a distribution warehouse for an online store. This business model is still going strong today, but a wholesale distributor’s role has expanded, especially in the digital age.
Some wholesalers have stepped into the limelight and sell directly to consumers themselves. The customers enjoy the extra savings enjoyed from purchasing directly from a wholesaler, and distributors in turn are able to raise prices slightly higher and still maintain a profit. Stores such as Costco follow this model.
As mentioned above, dropshipping has become another popular way to utilize the low prices offered by wholesalers. Dropshippers usually operate online, and much like retailers, they partner with wholesalers to get good deals on items.
Unlike retailers, however, dropshippers do not purchase the items in bulk, nor do they keep any stock of the items they sell. Instead, when a customer places an order, the dropshipper sends the order to the wholesale distributor. The distributor then processes the order and ships directly to the customer.
If you’re interested in selling online, chances are you’ll need to locate a wholesale distributor to provide you with the products you wish to sell. Your first step to making money online is to find the right distributor for your business.
Once you’ve found your wholesale distributor, it’s time to make that first contact and gather more information about doing business with them. There are several things you’ll want to include in your list of questions while you vet your list of potential wholesalers.
What are the prerequisites to buy wholesale?
Other important information to find out before doing business with a wholesaler:
Wholesalers are often the sole link between the manufacturer and the retailer or customer. At times, this can form a risky bottleneck. It makes your business more sensitive to outside factors such as:
A disruption in the flow of goods can lead to sudden price changes, forcing wholesalers and at times even retailers to operate at a loss in order to stay afloat.
There are a few steps you can take to minimize the risks of dealing with wholesale distributors. Firstly, always vet and review them before making a deal. Secondly, pay attention to sales trends and anticipate the ebb and flow of product availability and popularity.
Consulting online directories such as SaleHoo will allow you to find pre-vetted lists of distributors and even check on sales trends for products. That way, you can avoid the risks of dealing with a shady distributor or trying to sell a product no one wants.
Finding the right wholesale distributor can help your business in a big way by helping you get the products your customers want with the quality and timeliness they expect. If you take the time to locate and build a relationship with a qualified distributor, your customers will thank you!
How was your experience finding wholesale distributors? Tell us your thoughts in the comment section below