Becoming a wholesaler is a great way to make money from home. Whether you want to increase your current income by making a little extra money, or become a wholesaler as your main job, there are many different types of businesses you can get into. You will need good trading skills and business skills to make good deals with suppliers and get good prices from buyers.
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Part 1 of 3: Determining Effort
Step 1. Decide what you want to sell
The wholesaler's main goal is to buy goods in bulk at a relatively low price per unit, and then sell them in smaller quantities at an increased price. To trade successfully, you need to buy items that have a fixed value and allow you to sell them for a profit. Do thorough market research to find out what type of product is right for your business.
- If you have specialized knowledge in a particular area, take advantage of it. If you have experience working in a particular industry, this can be a huge advantage for you.
- An important factor in becoming a good wholesaler is good trading skills. If you feel confident in the product you are selling, you are more likely to be a convincing seller.
Step 2. Consider the type of wholesale business you want to run
There are a number of different types of wholesale businesses, so before going too far, you should have a clear idea of the basics of the business you want to run. The most common type is known as the “General Wholesaler.” companies that sell large quantities of goods from one or more suppliers and then sell them in smaller quantities at a higher per-unit price will usually fall into this category. Other types of wholesale businesses include:
- A specialty wholesaler may have many suppliers and buyers, but still specialize in a particular industry or product line.
- A particular product wholesaler only buys and sells one particular type of product, such as shoes.
- Discount wholesalers provide discounted items, often because they are “refurbished”, discontinued or have been returned.
- Wholesale trade ''dropshipping'' is a business that buys and sells goods like any other wholesaler, but without actually taking care of the goods, but sending them directly from the supplier to the buyer.
- Online wholesalers are people whose businesses are online based and do not have a physical store. This can be a less expensive way to run a business, but will limit the amount of stock you can manage.
Step 3. Perform a financial evaluation
After conducting market research and developing a clearer picture of the type of wholesale business you want to set up, you need to assess your financial situation. The access to capital that you have will have a big impact on the type of business you set up and maintain. You should know that wholesale business can take two to five years before it starts to make big profits.
- If you have limited funds at first, consider starting a small online business and increasing your knowledge and experience while building your stock of funds.
- Once you have more ready liquidity, you can start expanding your business activities.
- Don't try to grow your business beyond your finances. Getting into debt to start a business will present additional risks to the business and is something that should be avoided.
Step 4. Make a business plan
An essential ingredient in any successful business is a thorough and thoughtful business plan. You need to establish this to strengthen your strategic plan. You also need to define the core values of your business and how you will operate them. The plan should include an analysis of the existing market as well as a projection of how you want to grow your business.
- You will need to enter information on the products you want to buy and sell and the strategy for doing so.
- Include a financial summary and how and when you plan to make a profit.
- You can look at some examples of wholesale business planning on the internet to help you get started.
Part 2 of 3: Setting Up Your Wholesale Business
Step 1. Grow your online presence
After planning and doing research for your business and market, it is time to develop your trading presence. Buy a domain name and create a website that appeals to your potential buyers and potential suppliers. You can buy a domain fairly quickly and cheaply.
Don't forget to also develop a presence on social media and connect all your business online portals
Step 2. Manage legal and regulatory requirements
Before starting a trading business, you need to make sure all the necessary legal permits and licenses are in place. This means you need to obtain a business license. This includes establishing your business as a legal entity and obtaining a Federal Tax Identification Number (also known as an Employee Identification Number, or EIN) in the United States or a Taxpayer Identification Number (NPWP) in Indonesia. You can apply for an EIN or TIN online. To register your business, visit the US Small Business Administration website or https://www.pajak.go.id in Indonesia.
You may need to obtain more permits and follow other regulations specific to your region. You can find out all the details for your area online
Step 3. Understand the various suppliers
If you want to start selling right away, you need to get a deal with a reliable supplier. This is a very crucial aspect of your business, and how you approach it will depend on the type of wholesale business you are developing. Make sure you understand the different types of suppliers.
- The four main groups of suppliers consist of manufacturers, independent craftsmen, import sources, and distributors.
- Distributors are often other wholesalers who buy from various sources and sell them for a profit.
- Take the time to really do some research on suppliers and understand how they operate, who they supply to, and what kind of quantity.
Step 4. Evaluate the supplier
After getting a clear picture of the existing suppliers, you should try to find the right supplier for your business. You need to think about more than just the price offered by the supplier. The cost of doing business with a company is more than just the price; You should know the reliability and speed of order fulfillment, as well as the quality of the goods themselves. This can be difficult to ascertain at first, so look for testimonials from other businesses and records of good business practices.
- Another factor to consider is the location of the supplier. If the supplier is a manufacturer located overseas, there is one more possible cost involved with shipping and the additional time it takes for the goods to arrive at their destination.
- Additional costs can be reduced by lowering the purchase cost, but be sure to consider these factors carefully.
Step 5. Get a physical location, if necessary
Depending on the type of wholesale trade you run, you may need to have a physical location that runs the ordering process and store inventory. If you're starting a small business, you may be able to run a wholesale business from your basement or garage. One way to lower expenses is to run a business from home and by doing so will cut rent and rates.
Part 3 of 3: Increasing Profits
Step 1. Develop marketing
When your business is in the "going concern" stage (the operation of the business is based on financial circumstances), consider what steps you can take to increase profits and make more money from your wholesale business. The first thing to think about is how you can increase sales by developing marketing. It's not just about increasing your presence and promoting your business through social media, although you should be doing this too. You have to think of ways to develop your offer to buyers and communicate more clearly.
- Consider focusing on one product at a time and developing specific promotional campaigns for specific product lines.
- If you're selling goods to other businesses, make sure you're involved in good B2B (''business-to-business'') networks and portals. There are many forums and listings that allow you to register and increase your presence in the business circle.
Step 2. Adjust the pricing strategy
Changing your pricing strategy can have a sizeable impact on your margins. You can try to increase larger orders from customers by introducing package prices. This makes especially sense if you sell goods to retail stores or other business entities rather than to individual customers. Take the time to carefully decide the pricing for your business. A package pricing strategy could look like the following:
- If the buyer buys 100 units of Product A, the price is Rp. 13,000 per unit.
- If the buyer buys 50 units of Product A, the price is Rp. 16,000 per unit.
- If the buyer buys 10 units of Product A, the price is Rp. 20,000 per unit.
Step 3. Consider a “dropshipping” system to streamline your business
One way to increase profits is to lower your business operating costs. An increasingly popular way to run a wholesale business is to implement a “dropshipping” system. If you run this system, you can incur very low costs because you don't really take care of the merchandise.
- You receive the order and pass it on to the supplier who then ships the product. This can be a way of entering the market with relatively little funding required.
- Although the cost will be lower, the margin per unit will also be lower. Do a lot of research and ask suppliers about prices to determine the possible profit.
Step 4. Change supplier
If you think you can get a better deal from another supplier, or you find it difficult to deal with multiple suppliers, you might consider limiting the number of suppliers you transact with. Having closer, built relationships with fewer suppliers can increase efficiency, lower costs and save time.
- Consider supplier reliability, overall costs (not just price per unit), and their willingness to develop a strong partnership with you.
- Also consider whether this supplier is expanding its product line and business practices. If they seem sluggish or don't keep up with the times, they may fail to adapt and thrive in their industry.
Step 5. Make a new deal with the supplier
As with seeking new deals with new suppliers, you should always explore the potential to improve terms of agreements with existing suppliers. This doesn't necessarily mean renegotiating all contracts, but asking for available discounts, special offers, and lower rates for larger orders. Business entities that sell to other business entities are often more flexible in pricing than retail businesses.
- If you've known the supplier for a long time, you may be able to get a sizeable discount on the cost of your order.
- If you order more than a certain amount, you can get a discount thereby saving money.
- Contact someone on the supplier's side to make sure you are aware of all the possibilities to lower your purchase costs.
Tips
- If you need to start a business at no outside cost, you might consider asking your potential buyers to pay a down payment and then use the money to pay the producers.
- You can also get evidence from buyers that they do intend to buy and then use that evidence as bargaining power to see if you can get the order on credit.
