If you could put in a few hours a week and start making an extra couple thousand dollars a month within a year, you’d probably like to know how to do it, right? That’s exactly what is possible when you become a retailer using wholesale sourcing for the products you sell. The more time you put in, the more likely you are to be able to make it your primary source of income. That is, as long as you learn the ropes and get started right.
Which is why we’ve created this guide for you—to help you jumpstart your new retail business. It’s not exhaustive but, when used with our many other resources, it’s going to go a long way toward getting you ready for success.
There are a lot of moving parts involved in getting a product in the hands of the people who want it, but these parts break down into just a few major roles:
In this guide, we’re focused on educating you about becoming a retailer through wholesale reselling.
Starting a retail business is easy. So easy, in fact, that many people jump right into it, expecting immediate success. Some of these people are lured in by misleading or downright false advertising. On the flip side, those who’ve heard nightmare stories about “work-from-home scams” often dismiss this way to make an honest living.
Easy doesn’t mean simple. Just like the supply chain, there are a lot of moving parts to running a solid, successful business. Here are a few things to be aware of as you consider wholesale sourcing for your retail business:
Now that we’ve given you a healthy dose of medicine, here’s the spoonful of sugar to help it go down: For those who are willing to understand that retail selling through wholesale sourcing is not a “get rich quick” scheme and who want to commit themselves to the hard work, there are some wonderful benefits to running your own business:
Sold on selling yet? There’s more to understand, so keep reading.
Read much of anything about selling online with wholesale sourcing and you’ll learn there’s a lot of emphasis on choosing a product. That’s because the right product can help make your business a success. We have some tips for you as you evaluate potential merchandise for your store:
Use our Market Research Lab. It’s a free tool to help you measure a product’s demand and it’s easy to use—just type in the name of the product and click “Analyze.”
Research what sells best on which market. We’ll talk about different online selling platforms in a moment, but here’s some helpful information on matching your products to the marketplace.
Don’t be afraid to get specific. In fact, the more specific you are with your product focus, the easier it is to target consumers and build your customer base. Choose products that will be of interest to a certain demographic, such as a particular group of hobbyists or certain businesses.
Maximize your profit margin. Smart product sourcing is about a number of different things. A low wholesale price cannot be your only way of ensuring a good return on your hard work. Look for products with one (better yet, more than one) of the following features:
Another significant factor in your online store’s success is its location. While there are multiple marketplaces from which you can choose, most of them have similarities to one of the three major choices we outline for you below.
It’s easy to jump aboard the “world’s largest online marketplace” and start accessing its huge audience. The site garners tens of millions of visitors monthly, so marketing isn’t needed to drive traffic to the site; however, the competition on eBay is fierce and mostly driven by price. You’ll need to work hard to differentiate yourself and watch your profit margins while keeping eBay’s fees in mind. Constant maintenance and relisting should also be factored into your profit equation. eBay sellers are nearly invisible, and all that work might pay off now, but you won’t be building a business that can be considered a strong asset in the future. Despite the obstacles, eBay is still a popular choice for wholesale sourcing resellers and we have a whole section of training modules dedicated to the world’s go-to auction site.
Many wholesale resellers have seen success as third-party sellers on the Amazon marketplace. You won’t need to worry about relisting items, and it’s possible to remove the hassle of handling shipping by sending the retail giant your bulk inventory and relying on their fulfillment services. Amazon also charges fees for using their site to sell and gives sellers even more anonymity than eBay, as it focuses on providing consumers with a consistent shopping experience. This lack of branding potential means your hard work will not accumulate into a salable asset down the road. Another significant mark against Amazon is their practice of using your sales data to identify what moves well and then marketing those products themselves. You risk working hard to develop a profitable niche on their marketplace just to have them muscle you out of the way with their ability to offer your items at lower costs.
Creating your own site is your best option for building not just a business but an asset for the future. This avenue also gives you the most flexibility for product focus, the most freedom to market your business and merchandise and the most versatility for combining wholesale sourcing with other types of product fulfillment. You don’t have to be a programmer or designer to create a professional-looking site; choose a ready-to-customize store that suits the brand you want to build. You will have a learning curve on marketing your site and making it search engine optimized (SEO) to drive traffic, since you can’t take advantage of a more established, larger site; this is where targeting a specific niche can really pay off. Adding value with rich product information and possibly other services is also more of a possibility when you run your own site. You’ll have to spend a bit of money upfront on the site, but the costs are relatively small and predictable in comparison to fees on eBay and Amazon. For more on selling via your own site, check out our learning modules in our Seller Training Center.
The suppliers from which you choose to source your products can make or break your retail business, so you need to spend as much time searching for, and then researching, your potential vendors as you do choosing your products and selling platform. Don’t ignore the possibilities offered by international wholesalers. There are multiple ways to find wholesalers—we go into the process in a little more depth in our training module—but here are a few quick ideas:
You’re about to set up a business that, at the least, will provide extra income for your household or, at the most, will earn you the equivalent of a full-time job as you work from home. So why would you trust your personal money and your business’s reputation to just anyone? It’s crucial that you spend time screening your possible wholesale suppliers before you do business with them.
A phone call to a sales rep or other qualified staff member is a great way to start the relationship. You should ask questions to get to the heart of these issues:
If you like what you’re hearing, your next step is to place a small test order to find out if you’ll like what you experience. It’s a great way to get your feet wet and get an idea of how the process will work.
Now that you have a pretty good grip on your product, your market, and your supplier, it’s time to get the other pieces in place to create a great business plan and structure. By now, you should know that retail selling online is not a “get rich quick” method, but will require your ongoing thoughtfulness and dedication to develop a successful, enduring business. We have just a bit more parting advice to help you take a professional approach as you launch your wholesale-sourcing retail shop.
You need to legally form your business. How much liability protection you want for your personal finances and assets depends on how much you want to invest in the registration of your business. The least expensive route is a sole proprietorship, but it’s also the least legally protective form. A limited liability company (LLC) is the next step up and makes your company a separate legal entity. Ongoing legal fees to maintain the status make it more expensive. You’ll get the most protection—and spend the most in formation and on the double taxes—with a C-Corp. Find out more about getting your business going legally with our guides.
Plan now for the “hiccups” you’ll encounter as you operate your retail business. Issues like returns, damaged items, fraud, international shipping problems, chargebacks and backorders will become a—hopefully rare—part of your world. The best time for dealing with a problem is before it even happens, so put some time into crafting comprehensive policies that communicate clearly to you and your customers how you’ll handle the problem. Before you do, however, take a good look at the policies your wholesale suppliers have in place and make sure you either align yours to theirs or are willing to take responsibility for any differences.
Don’t forget your marketing strategy. If you’re running your own site, you’ll need to get up to speed on SEO and online marketing to drive traffic to your store. Included in your marketing strategy should be an outline of how you will add value for customers in the way you provide information and support.
Take advantage of every opportunity to continue your education on running your online retail business, including wholesale sourcing, marketing, shifting product popularity and other relevant issues. We have several resources for your use:
We believe you should put a lot of thought into your business, then put a lot of work into it. However, if you wait until you have the perfect business plan, you’ll never start. Experience is the best educator, so be sure to take a deep breath and actually dive into your new future as an online retailer. Just remember, while you’ll own your own business, you don’t have to navigate the ins and outs all alone—join SaleHoo and discover a complete support system that provides you with the tools, knowledge and community to get and keep you going.