The Reality Of Buying Wholesale
Kirk A Larson
In my line of business, I often receive emails and phone calls
from people who are just starting their online retail
businesses and searching for wholesalers who can give them
competitive prices on the latest merchandise from the most
popular brand names. While it’s understandable that one would
want to sell the latest merchandise from the highest quality,
most popular brand names, it’s often an unrealistic goal unless
you have a substantial amount of capital to invest in your
business.
This is not to say that every prospective entrepreneur with the
dream of establishing an online retail business should just
throw in the towel – quite the contrary. Prospective online
retailers need to understand the reality of the consumer goods
industry, the abilities that they have based on their capital
investment, and then design their business plan accordingly. In
my next article, I’ll discuss some excellent options for
prospective entrepreneurs with limited capital.
But first, let’s look at how some of the most successful
companies in the consumer goods market operate their
distribution channels. Companies with highly popular brand
names have worked hard to establish these brands.
Understandably, in order to protect the reputation of their
brand names, they often establish strict controls in their
distribution channel to ensure that their name is not
compromised by association with a sub-standard retailer.
Many of them directly control their distribution channel and
only sell their products to authorized retailers who have met
their application requirements. Their requirements for
authorized retailers often include:
1. A substantial minimum sales volume
2. A physical presence, not just an online storefront
3. An established history of retail sales and an exemplary
credit rating
4. Strong recommendations from other vendors with whom a
business has dealt
Some brands don’t allow private retailers to resell their
products at all. Companies who operate in this manner may own
their own retail shops and online retail websites. This is
rare, but there are still some companies who operate like this,
not allowing any independent retailer – large or small – to
carry their products.
Many brands don’t directly control their distribution channels,
opting to allow wholesalers to handle distribution to retailers.
However, even if they don’t directly control distribution, they
still may establish policies that their wholesalers must
follow. These policies may be very similar to the policies
often employed by brands that directly control distribution,
employing one or more of the following requirements:
1. A substantial minimum sales volume
2. A physical presence, not just an online storefront
3. An established history of retail sales and an exemplary
credit rating
4. Strong recommendations from other vendors with whom a
business has dealt
Companies who operate their distribution channels with any of
these levels of control will most likely not allow small volume
wholesale purchases, eliminating distribution to start-ups with
limited capital. The best advice that I can give to a
prospective retailer is to pick up the phone and do your
research directly with the source. Call the company’s sales or
public relations department and inquire about their
distribution policies before putting forth a lot of effort
searching for their products through wholesalers. You’ll
potentially save yourself hours of wasted time. Not to mention,
if you happen to meet the requirements for establishing a direct
relationship with the manufacturer, there is no better place to
obtain your products.
In my next article, I’ll look at options that are available for
the majority of prospective online retailers, those who don’t
have an endless source of investment capital that would allow
them to meet the reseller requirements of any manufacturer. For
those businesses, the newest merchandise from the most popular
brands may not be an option. However, that doesn’t mean that
the dream of owning an online retail store is out of reach.
Until then, do your research by calling manufacturers to
inquire about their distribution policies, and, as always, good
luck in all of your business ventures!
About The Author: Kirk A Larson has worked for over 15 years in
business as a writer, personnel manager, and most recently for
the last 4 years as a successful entrepreneur. To learn more
about Wholesalers, visit The Wholesale Suppliers Registry at
http://www.wholesale-suppliers.net
<< ------------ End of Free Reprint Article ----------- >>
Find More Free Articles
See Also:
Back to All
Free Articles About Money & Finances
Index of All
Free Reprint Articles
