Where do you rank in the product supply food chain?
The terms wholesaler and distributor are used quite flexibly, with different people meaning different things by those terms. Many wholesalers, distributors, and agents pretend to be manufacturers. Added to that are a multitude of sourcing agents who will offer their services to you to help you find suppliers.
Strictly speaking the hierarchy should be something like this:
1. At the top of the pile is the manufacturer. These people have a factory where they actually produce the goods. Some will supply direct to resellers such as you, but you will find that if you approach local manufacturers you will often encounter barriers. They usually have their sales network already in place and small resellers are seen as a nuisance. If however, you approach real manufacturers in China, or other exporting countries, they will usually welcome you with open arms. When you are buying from manufacturers you are almost certainly getting the lowest price possible, giving you the highest profit margins.
2. Next come the distributors who have been granted the right to sell the products to people such as you. They buy from the manufacturers at a discount because the manufacturer does not want to deal direct with resellers. Many people either out of ignorance or desire to deceive call themselves distributors when in fact they are resellers just like you, or maybe because they are actually wholesalers.
3. Wholesalers usually buy very large quantities and carry them in stock for sale to resellers like you. They have usually obtained the products at the best price that the manufacturer or distributor will agree to. They will sell to you at a price which is supposedly lower than the recommended retail price, but in many cases they charge resellers the same as or very close to the same as they charge individual customers. Those who do this are not genuine wholesalers, but are retailers in disguise.
4. Resellers, (you) are near the bottom of the food chain. The individual consumer is at the bottom. You buy at the lowest price you can negotiate, and try to make a profit on reselling the goods.
Profit margins are incredibly variable. I teach that it is best to go direct to the manufacturer if you want to maximise profits. The difference between wholesale prices and direct from the factory prices can be staggering. You may think that because you can only place small orders then you cannot buy direct, but that is not the case. There are ways to negotiate with manufacturers and get them to accept small orders even if they quote big Minimum Order Quantities. Profit margins, even on small orders can be amazingly high.
I have not included dropshippers because they are in effect wholesalers, unless they are "middle men" who pretend to be wholesalers. These people often set up turnkey dropshipping sites that provide free websites. The worst of them charge you to join. Although I said the consumer is at the very bottom of the food chain, dealing with middle men puts you in a similar ranking, but is far worse because it robs you of any hope of making a profit.
Don't give up. Make your way as near as possible to the top. Buy direct from the factories. If you have the means to sell physical products that is the hard part. Safely sourcing them even in small quantities at best prices and them importing them are the easy parts.
Strictly speaking the hierarchy should be something like this:
1. At the top of the pile is the manufacturer. These people have a factory where they actually produce the goods. Some will supply direct to resellers such as you, but you will find that if you approach local manufacturers you will often encounter barriers. They usually have their sales network already in place and small resellers are seen as a nuisance. If however, you approach real manufacturers in China, or other exporting countries, they will usually welcome you with open arms. When you are buying from manufacturers you are almost certainly getting the lowest price possible, giving you the highest profit margins.
2. Next come the distributors who have been granted the right to sell the products to people such as you. They buy from the manufacturers at a discount because the manufacturer does not want to deal direct with resellers. Many people either out of ignorance or desire to deceive call themselves distributors when in fact they are resellers just like you, or maybe because they are actually wholesalers.
3. Wholesalers usually buy very large quantities and carry them in stock for sale to resellers like you. They have usually obtained the products at the best price that the manufacturer or distributor will agree to. They will sell to you at a price which is supposedly lower than the recommended retail price, but in many cases they charge resellers the same as or very close to the same as they charge individual customers. Those who do this are not genuine wholesalers, but are retailers in disguise.
4. Resellers, (you) are near the bottom of the food chain. The individual consumer is at the bottom. You buy at the lowest price you can negotiate, and try to make a profit on reselling the goods.
Profit margins are incredibly variable. I teach that it is best to go direct to the manufacturer if you want to maximise profits. The difference between wholesale prices and direct from the factory prices can be staggering. You may think that because you can only place small orders then you cannot buy direct, but that is not the case. There are ways to negotiate with manufacturers and get them to accept small orders even if they quote big Minimum Order Quantities. Profit margins, even on small orders can be amazingly high.
I have not included dropshippers because they are in effect wholesalers, unless they are "middle men" who pretend to be wholesalers. These people often set up turnkey dropshipping sites that provide free websites. The worst of them charge you to join. Although I said the consumer is at the very bottom of the food chain, dealing with middle men puts you in a similar ranking, but is far worse because it robs you of any hope of making a profit.
Don't give up. Make your way as near as possible to the top. Buy direct from the factories. If you have the means to sell physical products that is the hard part. Safely sourcing them even in small quantities at best prices and them importing them are the easy parts.
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