As a small business owner, it often makes sense to purchase wholesale. Wholesale purchasing involves buying products at a discount and then reselling them to your customers, usually for a higher price. In this endeavor, you would probably work with a wholesale distributor. This way you’re not having to worry about where the products are coming from and are not having to source from multiple vendors or manufacturers.
The key to wholesale purchasing of course is to maximize your profits. And especially, once you do you have trusted suppliers with whom you work, you will be able over time to get those expenses associated with wholesale purchasing to go down. You, therefore, stand to make more money once you do sell the products to the end-users. Businesses that follow this particular model are generally considered resellers. Reselling has become a big business over the course of the past decade.
Some Key Benefits of Wholesale Purchasing
While this particular business model may not be for every small business, for those who are interested in wholesale purchasing and reselling, there are definitely some tremendous benefits to be had.
1. Product selection. When you work with wholesale distributors, it goes without saying that you will have a wider selection of products to choose from. Now keep in mind, that there are a couple of different ways of going about your product selection. You might opt to stick with purchasing bulk lots or pallets of similar items. This way you streamline your product portfolio. Customers know precisely what you have, and they grow to rely upon this selection. On the other hand, you could access a wide array of different items. It really depends on your particular business and what you want to focus on selling. The other good thing about wholesale purchasing is that you often get items that many resellers may not otherwise have access to when sticking to just a traditional retail market.
2. Quality brands. Oftentimes, when buying wholesale you have the option to choose brands that are readily identifiable. This means that your customers already trust that brand; they already have confidence in purchasing that particular brand. Brand recognition is incredibly powerful when it comes to retail. Just think of companies such as Nike and Apple that have built empires based largely on brand recognition. So let’s say, for example, you are an electronics reseller. In terms of wholesale purchasing, you can select lots that include names such as Apple, Samsung, or LG, among others. In this way, you entice customers by virtue of the brand names you are selling.
3. Reduce your shipping costs. Because you are buying in bulk when wholesale purchasing, your shipping costs are likely going to be lower than if you were buying smaller shipments from various retail marketers. You do want to compare and contrast shipping costs among the various wholesale distributors. Remember, the key is to maximize your profit margin when reselling these items.
4. Optimal pricing. Perhaps the number one reason why small businesses will opt to go the wholesale purchasing route is because of cost. In fact, many business owners have saved thousands compared to buying retail. You then resell these items comparable to what others are selling them for. It is important therefore to gauge your market and figure out exactly what price points will and won’t work.
Getting a Small Business Loan for Wholesale Purchasing
If you are a reseller of wholesale goods, there are business loans available to help you purchase the items that you need. Various small business loans will allow you to buy products in bulk so that you can resell them, make money on those products and subsequently repay your loan. The key is to do your homework in terms of both the wholesaler that you’re buying from and the target audience that you are selling to.
First Union Lending is Here to Help
We work with small businesses across the United States. Our job is to help companies thrive and ultimately grow. We offer short-term loans, SBA loans, and equipment financing, among other funding types. Even for those who do not have an ideal credit score, we might still have a solution for you. With resources ranging from $5000 to $1 million, we have the cash on hand to help you right now, not weeks or months from now. Call today.