The truth about wholesale product supply comes as a shock to many ecommerce newbies. The truth is that wholesale prices are those prices set by a true wholesaler. In some cases, the manufacturer may play a role in setting minimum prices. Before we even talk about prices, it is important to understand that a wholesaler is a particular kind of business with a special business license granted by its state of residence allowing it to distribute manufacturer goods without charging sales tax. The wholesaler is in charge of the warehouse space for holding its line of goods, maintaining a sales staff, shipping and handling, and all of the administration involved in order fulfillment and tracking. Although there are some factory direct wholesalers, wholesale distributors are generally the next step in the process of getting goods to the retail market. Thus, manufacturers generally require wholesalers to purchase large quantities of all of their product line. Wholesalers, in turn, make their money by selling their products in volume to retail merchants. The key to their profits is selling in bulk, and their main customers are retail outlets with regular bulk orders.
Because the wholesaler depends on bulk order, wholesalers often reward larger orders with greater discounts and often have levels of pricing. Each wholesaler defines its own levels; for example, quantities of 1 to 25 might sell at one price, quantities of 25 to 50 at a lower price, and quantities of 50 to 100 at a still lower price. Also, some wholesalers may allow their sales force to determine the amount of discount based on their relationship with their client. You can see that prices are flexible and your price will depend on the quantity you purchase as well as how you are valued by your sales representative.
Some wholesalers also give manufacturer rebates, and others offer three day specials, weekend specials, holiday specials where the wholesale prices are even further discounted and where the wholesaler may even offer free shipping. If you are able to buy in large volume, you can really leverage the power of these price breaks. The problem that many single person business and eBay sellers face is that they can't afford to purchase in quantities that would allow significant price breaks. There really isn't any mystery to low prices; the secret is generally tied to bulk purchasing.
Legitimate wholesale businesses in the United States are required to see proof of your sales tax permit, sales tax ID, or resale certificate. A sales tax permit is a document from your state department of revenue that allows you to buy products from licensed wholesalers without paying sales tax. It is understood that when you sell your products to residents of your state that you will remit the sales tax to the state treasury at quarterly tax periods. The sales tax permit is an essential document proving that you are a legitimate retail business.
Just as true wholesalers are required to have proof of your sales tax ID, you must be aware that any business claiming to be a wholesaler or implying that it is a wholesaler but not requiring your tax permit is not a real wholesale business. These sorts of distributors are often called middlemen. Middlemen are simply retailers selling discounted goods to other retail businesses. This is only bad when the middleman advertises that it is a true wholesaler or strongly implies this it is a wholesaler. How can you tell the difference? First and foremost, these businesses do not ask you for a sales tax ID. Second, they often use the term "wholesale" and "wholesale prices" frequently throughout their site but never come right out and explicitly state that they are a wholesale distributor.
Did you know that real wholesalers will not let you see their price list until you set up an account? This is partially a safeguard against competition but it is also part of doing business. There really is no need for a true wholesaler to show off their prices on the Internet as they don't rely on the Internet to acquire customers. You must deal with the wholesaler as any other brick and mortar retailer even though your store is online. Thus you must set up an account. The first step in setting up an account is to follow the instructions either given in correspondence on those listed on the company website. Do not badger with company with repeated emails, and phone calls. All it takes in one email, or one phone call, or simply following the steps given on the website. Remember to be professional, and be prepared to provide proof of sales tax permit, proof of references, proof of ability to pay, and some wholesalers will want proof of a business bank account. In my experience, wholesalers are primarily concerned that you are a real business and meet the requirements of legality.
Because the wholesaler depends on bulk order, wholesalers often reward larger orders with greater discounts and often have levels of pricing. Each wholesaler defines its own levels; for example, quantities of 1 to 25 might sell at one price, quantities of 25 to 50 at a lower price, and quantities of 50 to 100 at a still lower price. Also, some wholesalers may allow their sales force to determine the amount of discount based on their relationship with their client. You can see that prices are flexible and your price will depend on the quantity you purchase as well as how you are valued by your sales representative.
Some wholesalers also give manufacturer rebates, and others offer three day specials, weekend specials, holiday specials where the wholesale prices are even further discounted and where the wholesaler may even offer free shipping. If you are able to buy in large volume, you can really leverage the power of these price breaks. The problem that many single person business and eBay sellers face is that they can't afford to purchase in quantities that would allow significant price breaks. There really isn't any mystery to low prices; the secret is generally tied to bulk purchasing.
Legitimate wholesale businesses in the United States are required to see proof of your sales tax permit, sales tax ID, or resale certificate. A sales tax permit is a document from your state department of revenue that allows you to buy products from licensed wholesalers without paying sales tax. It is understood that when you sell your products to residents of your state that you will remit the sales tax to the state treasury at quarterly tax periods. The sales tax permit is an essential document proving that you are a legitimate retail business.
Just as true wholesalers are required to have proof of your sales tax ID, you must be aware that any business claiming to be a wholesaler or implying that it is a wholesaler but not requiring your tax permit is not a real wholesale business. These sorts of distributors are often called middlemen. Middlemen are simply retailers selling discounted goods to other retail businesses. This is only bad when the middleman advertises that it is a true wholesaler or strongly implies this it is a wholesaler. How can you tell the difference? First and foremost, these businesses do not ask you for a sales tax ID. Second, they often use the term "wholesale" and "wholesale prices" frequently throughout their site but never come right out and explicitly state that they are a wholesale distributor.
Did you know that real wholesalers will not let you see their price list until you set up an account? This is partially a safeguard against competition but it is also part of doing business. There really is no need for a true wholesaler to show off their prices on the Internet as they don't rely on the Internet to acquire customers. You must deal with the wholesaler as any other brick and mortar retailer even though your store is online. Thus you must set up an account. The first step in setting up an account is to follow the instructions either given in correspondence on those listed on the company website. Do not badger with company with repeated emails, and phone calls. All it takes in one email, or one phone call, or simply following the steps given on the website. Remember to be professional, and be prepared to provide proof of sales tax permit, proof of references, proof of ability to pay, and some wholesalers will want proof of a business bank account. In my experience, wholesalers are primarily concerned that you are a real business and meet the requirements of legality.
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