Purchasing items at wholesale cost and selling them for a profit is a business model that has worked for many. Buying merchandise wholesale is not as easy as just calling a store and ordering the quantity you are looking for. There are certain steps that must be taken to be successful in the wholesale world.
Things You'll Need
- Tax ID
- Vendor license
Apply for a Tax ID. Before attempting to find wholesale merchandise to sell, you should first apply for a Federal Tax Identification Number. Applying for a Tax ID is easy and can be done in just a few minutes on the IRS website. Having a Tax ID has two benefits. First, you will be able to open a bank account under your business name, making you look more professional to anyone you do business with. Second, many wholesale vendors require you to have a Tax ID. These wholesale vendors do not deal with the public at all and your Tax ID will prove that you are a business.
Obtain a vendor license. Unless you plan to sell your merchandise strictly over the internet, you'll want to have a vendor's license. Most states require you to be licensed if you intend to sell at flea markets, retail locations, etc. You can visit the official website for your state to determine if this is a requirement where you reside.
Do your research. Before jumping in and buying a lot of merchandise, it is important to do a lot of research. You will need to make a lot of decisions regarding exactly what type of merchandise you would like to buy. The easiest way to do this is to have an idea of what you are looking to sell and do research to determine how saturated the market is, average selling prices, etc. This information will come in handy when discussing prices with a potential vendor as you will have an idea of what prices you'll need in order to make a profit.
Find products to sell. This is often the most difficult part of the process. Other people who sell similar products protect their sources since they do not like competition. One of the best ways to find sources for your product is to attend trade shows. There are huge wholesale trade shows held annually in Las Vegas and California, but there are also shows held across the country. In addition to the trade shows, there are various sites online who sell their items exclusively to wholesale buyers. You can find lists of shows and companies at sites such as Wholesale Directory.
Negotiate your prices. Once you have a found a vendor, you'll need to sit down and negotiate prices. Depending on what you are selling, you can expect to hear prices by the piece, box, pallet or truckload. If you have the capital available, buying by the truckload is always your best option. Buying smaller lots may afford you the ability to purchase items at 20 percent or so off the retail price, buying by truckload can give you bulk discounts and you can get items at 50 percent of the retail price. Of course, these amounts are just examples and can vary depending on the merchandise and the vendor.