How to Become a Wholesale Distributor

A wholesale distributor is an entrepreneur who brokers manufacturer-to-customer sales of wholesale goods and merchandise. Typically, a wholesale distributor operates out of a store or warehouse, though in the age of the Internet, more and more are opting to set up shop online.

Things You'll Need

• Start-up capital

Instructions

1. Get business and/or marketing training, either at a 4-year institution or a community college. As a wholesale distributor, you'll be in business for yourself, so the more complete your understanding of the economic forces that drive the business world, the better your chances of success.

2. Decide upon a type of product that you want to become a wholesale distributor of. For example, if you know a lot about cars, gravitate towards the automotive industry. If you know a lot about video games, become a wholesale electronics distributor.

3. Contact the manufacturers whose products you want to carry and inquire about their wholesale practices and rates. Compare these to retail rates, factor in shipping and overhead expenses, and determine which products have the greatest profit potential.

4. Draw up a business plan detailing how you plan to launch your business. To complete this step, you'll need to know what products you plan to carry, how much merchandise you anticipate being able to move and who you think you'll be able to move it to. Be sure to detail costs, expenses, the anticipated size of your staff and profit projections.

5. Attain the start-up capital you'll need to get your wholesale distributor business up and running. This step will typically be completed by speaking to a bank about a business loan. If your credit history is less than stellar, you should expect that you'll encounter significant difficulty getting a bank on board with you, so you might try private investors instead.

6. Start smaller and build bigger. Don't have unrealistic expectations for your first months in business. It will take time for your distribution company to register on the map, and you'll need to differentiate yourself from your competition through lower prices or better service to attract and maintain your market share.

7. Study your competition. The most successful wholesale distributor knows what his competitors are doing and figures out a way to do it better.

8. Continue to build and grow your distribution business until it becomes profitable. Once it does, you can start to look at cost-cutting measures you can take to make it even more profitable. Use grass-roots advertising at first to get out the word about your business.

Tips & Warnings

• Stick with an industry you know already. The smoother your learning curve, the faster you'll get your business up and running.

• Beware of scams on the Internet promising big earnings in a short period of time. To become a wholesale distributor, you'll have to put in long hours and hard work to attain the kind of success these sites promise.