Step 2
Find Trusted Suppliers
There is a very nasty surprise awaiting new sellers: the prices that many wholesalers charge retailers make it quite difficult to earn a reasonable profit online. Many wholesalers charge prices that are only a few dollars less than standard retail prices.
When sellers add expenses such as PayPal and eBay fees and shipping costs to the final price, they realize they simply can't make any money. A lot of people drop out of online retail because of this. That's a mistake. Those people didn't pick the wrong products or business; they simply chose the wrong wholesalers.
Finding a reliable and fair wholesaler can be difficult, but it is possible if you use a good resource such as SaleHoo's Wholesale Directory. Although many sellers have access to these types of resources, they fail because they never took the time to understand how online retail and wholesaling works.
The Reality of Wholesale Pricing (eBay is a Wholesale Marketplace)
There's a secret to eBay that many sellers never learn: eBay is a wholesale marketplace. A wholesale market uses intense competition to drive prices down as low as possible.
Wholesale prices are often far below the retail price. The retail prices contain all the retailers' expenses, such as renting or buying the retail space, employee salaries, taxes, advertising, and utilities among others. Sellers on eBay often lack those expenses, so they can pass those savings on to the buyer.
eBay is also very democratic. You'll be competing with everybody, from mom and pop small businesses to giant corporations with vast resources; this creates a very unbalanced playing field. Many manufacturers, retailers, and wholesalers often dispose of unsold merchandise by liquidating it on eBay. These sellers enjoy a very low profit margin, which helps them make money.
These rules are doubly true for hot products and for name brand products. To make matters worse, some major brands, such as Apple, don't offer discounts. They deliberately keep margins low in order to drive sales higher.
Finding Low Prices on eBay
That means, to make money on eBay, you must find the lowest prices possible.
Finding low prices can be difficult because you'll be competing with larger sellers that have connections with suppliers which gives them access to special prices and deals. SaleHoo's wholesale directory can help you make similar connections with suppliers.
Use Wholesale Directories to Find Suppliers
The SaleHoo wholesale directory has over 8,000 verified suppliers from all over the world. This contact information can be your key to low wholesale prices that can ensure a good profit margin.
Not only is the directory a great resource in itself, but it is also very user-friendly. You can filter the results by geographic region, rating and age.
A very useful filter is 'Supplier type'. With this features you can easily select between:
- Dropshippers.
- Wholesalers.
- Liquidators.
- Manufacturers.
If you are on a budget, stick to dropshippers and wholesalers. If you have a cash to invest, you will get incredible prices from both wholesalers and manufacturers. When it comes to liquidators, everyone should experiment, or at least look around: Liquidators are well known for having exceptionally low prices on branded goods that buyers just can't get enough of. There are some downsides though, you can read more about liquidation sourcing here.
Another useful filter is the region filter that allows you to choose if you will source from suppliers from specific regions. If you are selling to local buyers, sourcing from international suppliers can help you get bargain deals, and help you access products that might be difficult to access in your local area and this can dramatically increase how much profit you make.
However, sourcing locally can work great too: Your shipping bill will be less and you won't have to deal with importing. In some cases, it can mean that you won't make big margins though.
The other filters allow you to filter by minimum order requirement (some suppliers have none, others request that you spend $500 or more) and using the Sales Tax ID filter you can determine if you want to work with suppliers who require tax IDs or not. If you are in the US, tax IDs are important! Read more about them here.
Tips for Building a Good Relationship with Wholesalers
The only proven way to get low wholesale prices is to establish a good supplier relationship with wholesalers and to buy in bulk. Wholesalers run on a volume-based model so the more you buy, the better the discount they can offer you.
The only way to develop such a relationship is to have a track record as a really good customer. If wholesalers see you as a really good customer, they'll be more likely to give you deals and better prices.
Here are some tips that can help you establish a good relationship with suppliers:
- Proven Track Record
Have a proven track record as a successful seller. Wholesalers usually prefer to work with established businesses. If you can establish yourself as a volume seller, such as an eBay PowerSeller, you'll have a much easier time getting deals from suppliers.
Try selling large numbers of used items or buying wholesale lots and breaking them up for resale. This can give you valuable experience and extra income.
- Liquidators
Try buying from liquidators because they are more likely to work with novice sellers. Liquidators can sell you name brand items for pennies on the dollar, and they are often willing to cut prices to move sales. Negotiating with liquidators is good practice for when you need to negotiate with wholesalers. Learn more about liquidators here.
- Get Established
Have a professional business up and running before you start contacting suppliers. This means having a trade name, a tax ID, and a proper business license. Many wholesalers won't deal with retailers that don't meet these requirements. Learn more about setting up a business here.
- Research
Do a lot of research on the market and the suppliers before making contact. Try to find out what prices you should be asking and what amounts you should order.
A great way to research wholesalers is to read the SaleHoo reviews. Find out as much information as you can about a suppliers inventory, minimum order requirements, recommended selling prices, the names of salespeople, and their pricing structure. Do all of this before you call them.
- Talk to a Salesperson
Contact the supplier directly and talk to a salesperson. Salespeople can often give you better prices and might be willing to bend the rules for you if you ask. Know the timezone of the wholesaler's office so you can call when the salesperson is there.
- Contact Multiple Suppliers
Contact as many suppliers as you can. Contacting a large number of suppliers will give you a good picture of the market. It can also increase your likelihood of finding really good prices or special deals.
- Be Persistent
Don't expect to establish good relationships right away. Many suppliers simply don't want to work with sellers they do not know. Others will work only with established sellers. You will probably be shocked by the number of suppliers that won't get back to you.
Another thing to keep in mind is that some wholesalers hear from a lot of new sellers each week. Each of these new sellers is full of optimism and insists that they are going to be the next online success story, but when the going gets tough, these sellers quit. So you will have to forgive some wholesalers for being a little pessimistic, or for wanting you to prove yourself.
- Bookmarking Suppliers
Try to collect as much information about wholesalers as you can during the contact process. A very useful tool that makes it easy to gather and store such information is the bookmark feature in the SaleHoo directory.
Not only can bookmarked suppliers' information be retrieved with ease, you can also make notes in the column adjacent to bookmarks.
A great way to utilise to note feature is to make note of the names of salespeople and the best times to call them. You can also note discounts and special offers for future reference.
Consulting the bookmarks and the notes will make placing orders and resolving problems much easier. You'll know who to contact, when to contact them and how to contact them.
Here's a great article that goes into the topic of supplier relationships a little further - 3 Things Wholesale Suppliers Could Do to Make Our Lives Easier!
How to Place an Order
Buying from a wholesaler is not like buying retail. It will usually take longer because many suppliers have lousy customer service.
Here are a few tips that can make posting an order easier:
- Be Patient
Wholesalers' customer service is poor, and they often give preference to established customers. It will usually take a wholesaler around a week to process an order. That means you may not receive your shipment for two weeks or longer.
Once you've established a good relationship, the process will get faster.
- Pay by Credit Card or PayPal
This makes processing faster, and it makes it easier to cancel transactions if something goes wrong.
- Ask for Names and a Tracking Number
Make sure the supplier gives you the name of the shipper and a tracking number so you can track your order. That way you can know it's been shipped and when it should arrive.
- Get a Phone Number
Get a direct phone number and email for a salesperson. That way you can contact a human being rather than an automated system if something goes wrong.
- Check Every Shipment
Check every item in the shipment as it arrives. If something is wrong, contact the salesperson immediately. This goes for damaged goods, wrong merchandise, returns, missing goods, and so on. Take pictures of damaged goods and other problems. You can email them to the wholesaler as proof of your complaint.
Having good relationships with wholesalers is critical to a sellers success. The best way to establish these good relationships is to start buying from wholesalers in order to familiarize yourself with their business.
Cultivate the supplier relationship. Be patient and aim to be their favourite customer and you will develop a business relationship that will take your eCommerce store to the next level. Then you can start thinking about where to sell and make your fortune.
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