Posts Tagged ‘liquidators’
Basics of Wholesale Product Outsourcing: Small to Medium Business Owners
Wednesday, November 14th, 2007
The business environment in the past decade or more has changed rapidly. It is now possible for a small to medium-sized business to flourish with the help of thorough market research and efficient wholesale product sourcing.
This kind of sourcing has its advantages and its pitfalls: if the source is genuine, profits are guaranteed, but if the source is defective in one way or the other, the entire business can fail. To ensure continued success in wholesale product sourcing, here are a few basics that a small to medium reseller needs to keep in mind:
Before buying wholesale, the buyer has to be sure of an existing target market in which the products can be resold at a profit. You should only buy a product on wholesale if there is a demand for it, feeding an existing demand is easier than creating one. Equally important: what is of no value to you could be of high value to someone else.
If a wholesale source seems too good to be true, it is probably a scam. Sourcing products on a wholesale basis is never easy, and needs a lot of legwork. Research is your best friend in finding a genuine wholesaler, there is no cheap shortcut to finding a wholesaler who would meet his or her end of the bargain.
A wholesaler should not be contracted till he or she is verified as having existed for a considerable period of time, factory-authorized, and working from a solid infrastructure. One of the best ways is still to call the wholesaler, and if possible, to make a visit.
Middlemen have to be avoided at all costs; these are the people who do not have access to the goods themselves. They arbitrate between the buyer and the seller while marking up the cost, sometimes posing to be legitimate wholesalers themselves. You must always verify if the wholesaler has a real, longstanding relationship with the manufacturer.
The idea is not only to be able to find a wholesaler who is selling the goods you want, but one who is also selling them at enough discount for you to be able to make a profit. Discount does not mean a compromise in quality, however.
A small-medium business owner can choose from amongst the following types of wholesalers:
Dropshippers: For a small to medium-sized business owner, drop shipping can be an excellent option. This means that you simply open a store, advertise a product chosen from the wholesaler and take orders. You charge your customer a retail rate for the product and pass the order to your wholesaler. Your wholesaler processes the order by packing and shipping the product directly to your customer, charging you the wholesale rate.
You do not need to have an inventory, only a small back-up store in case your wholesaler fails you, which you can order in "light bulk" from a supplier. The prices do go up in this case, because dropshipping can be expensive, so you have to ensure that you still make an adequate profit out of the amount you charge your customer.
Manufacturers: Most big manufacturers are not accessible to small businesses, but if you can find a way to get in touch, you might be able to buy wholesale directly from the manufacturer. Most small to medium or new manufacturers are more than happy to become wholesalers themselves, all you will need to deal with them would be an ID, tax license and resale license.
Since there is no distributor between you and the manufacturer, your profit margins would be higher. One of the best ways to source products from manufactures is to attend Merchandise marts and Trade fairs.
Liquidators: This can be attractive for small business owners as liquidators often sell stuff for pennies which can later be sold for dollars. The important thing is to find why the liquidation is taking place.
If it is happening to clear out the warehouse of a business that is closing down, but the goods are ok, then this is a good deal. But sometimes liquidations also happen because a product has no demand, or is defective, and this is where caution comes in.
Distributors: Wholesalers and distributors are those who buy in bulk from the manufacturers for resale to retailers. If you can find a factory-authorized distributor for a product and develop a long-term business relationship, you can place re-orders easily, and lower your buying price significantly.
Importers: Cheaper markets in Asia, especially China, have become very attractive to small-medium business owners because of the low cost of products: importing is now a viable option in order to achieve higher profit margins.
Importing involves more risk, higher volumes and higher payments, so it is best approached with the help of professionals. Communication with the wholesaler and the maintenance of delivery dates and quality standards is paramount.
The sort of wholesale supply that would be suitable for you would depend on the type of products you wish to source, what the size of your business is and the target market you have in mind. Wholesale sourcing is never simple; but once established, it can yield benefits for the long term.
Tags: advice, distributors, Doing Business Internationally, export, import, liquidators, manufacturers, outsourcing, Product Sourcing, small business, source, tips, wholesale, wholesale product outsourcing
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