Looking for a Wholesale Supplier? Beware the Middleman!

If you are looking to sell products on the Internet, finding a good wholesale supplier is a must.  With such a crowded online marketplace, distinguishing yourself from all the other competitors can be difficult, and many times, price is the determining factor.  The better price you can get from your wholesaler, the better profit margins you can squeeze from your customers.

But how does one go about finding a good wholesaler, and how do they differ from one another?

First, let’s discuss what a wholesale supplier is, and how some “middlemen” disguise themselves as wholesalers in search of profit.  A wholesale supplier is a company that can offer you products at a significant discount to the manufacturer’s suggested retail price (MSRP).  You purchase the product from the wholesale supplier and resell it to your customers at a higher price.  The difference in these two prices is your profit.

Wholesale suppliers generally do not sell to customers directly, but only to legitimate resellers with valid reseller certificates (see my article on Setting Up Your Business Financial Structures for more information).  So if you find a company claiming to be a wholesale supplier and they will sell to you without a reseller’s certificate, then chances are, they are acting as a “middleman”.  A middleman is simply a person, or company, that pretends to be a wholesaler offering a low price.  While in fact, they are acting as the purchaser for the real wholesale supplier.  The price they charge you is higher that what they purchase the product for from the real wholesaler.  They keep the difference as their profit.

Another feature of a fake wholesale supplier is the charging of monthly account fees to do business with them.  The only fee true wholesale suppliers usually charge valid customers is what they call a drop-ship fee, and on very rare occasions, an initial setup fee.  This drop-ship fee, usually in the range of $1 - $5, covers the cost to the wholesaler for the services of processing, packaging and shipping your order directly to your customer.  This is also known as blind drop-shipping since they usually include your name on the packing slip, not theirs.  Even though it is an additional expense to you, think about the benefits to you.  You have no inventory, no warehouse, no personnel to handle packaging, and basically, no overhead.  It’s well worth the fee, and as always, the cheaper the fee the better, since it does eat into your profits.

Wholesale suppliers usually differ from one another in the selection of goods available for purchase, their wholesale costs, and the fees they charge you (if any) to drop-ship the product to your customer.  Suppliers with a narrow focus of product lines tend to give a better base discounts on items verses a supplier that offers many product lines.  That is usually because they buy more from a certain manufacturer and qualify for a better discount, which is then passed along to you, the reseller.  The suppliers with a wide selection of product lines hope to lure those resellers looking for a single supplier for many types of goods.

So, where do you find a good wholesale supplier?  There are many places on the Internet that will try to sell you wholesaler/drop-shipper lists, but most are old, out-dated copies of the same lists that have been floating around the Internet for years.  While there is no single source for finding valid drop-shippers, the site that I found to be very helpful and informative is World Wide Brands.  They not only have a current directory of wholesalers, but articles and videos about the do’s and don’ts of drop-shipping.  If you are interested in selling online and are looking for a wholesaler, give World Wide Brands a look.  Chances are you’ll find a good wholesaler from them.  I did. 

Regardless of whether you need only one product type, or access to hundreds of products, do your homework.  Verify that the company is in good standing with the Better Business Bureau and check the web to see if others have done business with them and reported problems.  Chances are that if you’ve found a true wholesaler, you won’t find them listed all over the Internet.  Online merchants are usually tight-lipped about where they get their products from.  This is because they don’t want competitors undercutting their sales.