How to Find a Wholesale Distributor
Finding wholesale distributors is an all-important first step for any business selling products to consumers. Whether you’re planning on doing business online, in a store, or both, business won’t happen without distribution companies. If you’re already doing business, no doubt you’re interested in finding wholesale distributors who can help you improve your bottom line. You need a steady supply of bulk product at a reasonable price to make a profit.
What is Wholesale?
Wholesale is the bulk supply side of the supply chain. Manufacturers make deals with wholesale distributors to move large volumes of product. Then, wholesalers sell smaller volumes to retailers. Some wholesalers move small volumes of specialty products; some move huge volumes that encompass every type of product in an industry.
Essentially, wholesalers are the the middleman between manufacturers and retailers. According to the Small Business Association, wholesale suppliers also work with importers and exclusive distributors. “Jobbers” are part of the mix — they’re brokers who deliver goods from wholesalers to small businesses.
There are 415,000 wholesale establishments operating in the US, with the 50 largest distributors commanding 25 percent of the revenue. When determining which wholesalers you’re going to work with, you’ll need to decide whether you want to maximize revenue or profits, primarily. The largest wholesale distributors command as much revenue as they do because they’re moving huge quantities of product, but that doesn’t necessarily mean the retailers and wholesalers are making substantial profits on these products individually.
A good example of a distributor that has embraced revenue over profit is Amazon, which has traditionally focused on growth more than income by selling as many products as it can at a lower price. Your small business could also maximize revenue and prioritize growth by selling products as close to wholesale price as possible, but this would minimize profits.
How to Find Distributors
When you’re figuring out how to find wholesalers, there are a number of sources at your disposal.
Like any other type of business, the wholesale distribution industry has an active presence online. If you know what you want to sell, you can find national, regional, and local wholesalers through a simple internet search. Include your zip code in the search to target and find local and regional distributors.
Don’t call it good on the first page. Keep fishing for the wholesaler that can give you the best deal. The more specific you are with the product, model number, and brand name, the better off you’ll be as you search for niche distributors that are seeking to be competitive in securing your business.
You can also use directories, such as Worldwide Brands, Wholesale Central, and SaleHoo — but don’t assume you have to go through a well-established wholesaler. You may be able to find a distributor on eBay, for example, that suits your needs better than any of the wholesale giants. Search high and low, and eventually you’ll find the best deal for your operations.
By nature, business-to-business (B2B) trade shows are events where distributors are competing for your business, because they’re a great place to meet directly with wholesalers who are showcasing their wares. If you’re a retailer who’s already established, you can also take part in trade shows that feature suppliers, distributors and retailers. At these shows, you can both sell to consumers and discover wholesalers.
The Trade Show News Network (TSNN) is the largest online directory for discovering all manner of trade shows. If you’re looking for wholesale jewelry distributors, for example, TSNN shared news about the OFFPRICE show, which saw a 5.5 percent increase in retailer attendees in 2015 looking for products often priced at 70 percent below wholesale costs.
You can find ads and classified listings for wholesalers in trade magazines. Keep this in mind when it comes to finding and selecting distributors, and explore all of you options; not just those you can find online.
It’s not a bad idea to ask around for referrals from other retailers. There’s potentially a double benefit — they might not only point you in the direction of a good deal, but you can rest assured that the wholesaler they’re referring is trustworthy.
Obviously, it’d be a tough sell to get a referral from a competitor. If you have any friends in the industry, they’re your first go-to. That said, it’s a great idea to befriend other retailers in different cities. Attend trade shows, business conferences, and seminars; networking with other retailers at these types of events can lead to great referrals.
According to Chron’s Ray Cole, when it comes to buying directly from manufacturers, “[s]ome business operations may manufacture and sell products on a retail basis directly to consumers.” These operations will also sell directly to retailers. Chances are, if you can find a brand manufacturer who sells directly to consumers, that manufacturer will cut you a deal if you develop a relationship with them and make bulk orders. One caveat: you’ll need to be brand-exclusive to make it worth their while.
What Is Drop Shipping?
Drop shipping is an e-commerce retail strategy. Retail dropshippers advertise a product online, and when a customer places an order, the retailer orders it directly from a manufacturer or dropshipping supplier, and then ships it on to the customer. The seller doesn’t touch the product, but instead acts as a middleman.
This is a solution for retailers who are new to inventory management and haven’t built up their inventory yet, but it can also be costly because wholesale suppliers are typically going to be less expensive than a dropshipping supplier. Dropshipping comes with an added service fee attached. The general rule of thumb is that bulk product costs less than individual orders, because the cost per delivery is usually going to be the same regardless of quantity delivered — it’s more cost effective to send 1,000 units on one truck, than to send 1,000 trucks carrying one unit. Additionally, be wary of suppliers who will try to take you for a ride by promising fantastic, unrealistic shipping prices — they usually cover the loss by charging ridiculous up-front fees.
That said, reputable dropshipping suppliers do their best to offer competitive rates. There are many platforms that — for a fee — connect dropshippers to vetted suppliers. These platforms include AliExpress, SaleHoo, National Dropshippers, and Dropshipper.com. If you want to be more than just a middleman with a website and a pitch, the key is to find wholesale suppliers, implement a smart inventory management system and measures, and build relationships with your customers. Dropshipping is there when you need it, but when it comes to a long-term, scalable business, you’ll want to work directly with wholesalers to get the job done right.