Some businesses operate exclusively as wholesalers. In other wholesaling models, existing retailers expand by selling their goods wholesale to other retailers. Wholesale selling provides higher revenue from fewer transactions, lower overheads, lucrative partnerships with retailers, and a considerable source of repeat revenue.
This guide walks you through how to sell wholesale online to retailers to get your wholesale business started in the right direction.
Step 1: Set Up a Wholesale Channel
To begin selling wholesale to retailers, you need an exclusive platform where they can shop your products without consumers peeking in or placing orders. You can do this in different ways—you can create a password-protected storefront, add a wholesale channel via an app to an existing store, or build a wholesale storefront from scratch.
We talk about Shopify a lot in the options we list below. You can read more about the easy-to-use and scalable solution’s features in our Shopify review.
If you are considering how to sell wholesale products to retailers using your existing online store, you can create a password-protected storefront. Doing so allows legitimate retailers to access your store using your store password, see your discounted products, and place bulk orders while protecting your business from unapproved orders.
In Shopify, the easiest way to lock your online store is through Shopify’s password protection feature, available in the Shopify admin.
If you run a larger wholesale business and want to protect your wholesale products from unapproved retailers, consider subscribing to more sophisticated password protection apps like MagicPass and Locksmith, which are available on the Shopify App store.
You can create a wholesale channel using an app or plugin. For Shopify stores, over 200 wholesale apps are available to help you add a wholesale feature to your existing store.
For example, a highly-rated wholesale app like Wholesale Club allows you to assign your retail customers into “tiers.” Hence, you can set specific discounts and even set up a larger discount for bulk orders.
What’s great about wholesale apps is that only approved and logged-in retailer accounts see your wholesale pricing. You can have a secure wholesale channel on top of your direct-to-consumer one without setting up a separate store or product catalog.
If your retail business is already earning high revenue, you can consider subscribing (or upgrading) to Shopify’s highest tier, Shopify Plus, to take advantage of its wholesale channel feature.
Shopify Plus allows you to create a wholesale storefront using your existing products, so you just have minimal additional work to set up the wholesale channel. Its other advantage is that you can easily customize pricing by customer groups, using percentages off or volume-based discounts. Your sales reports are also separated from your direct-to-consumer sales within Shopify reports.
Alternatively, you can use a wholesale marketplace like Faire to help drive your new wholesale operation. Unlike building a standalone site, you can simply upload images to it, and it will build your product pages for you; payments are integrated into the platform. Sign up with Faire.
Step 2: Source Your Products
As a wholesaler, you will work directly with manufacturers to acquire your goods. In other words, you are already buying goods that manufacturers produce or working with a manufacturer to create a custom product you design.
Creating a new product is often used by independent brands, but the process can take months, and fees are often associated with every step. Be sure you are ready to invest the time and money it will take to complete the design of your own product.
Alternatively, you can work with a manufacturer to buy and sell a product that they already produce for a faster turnaround—a favorite strategy for Amazon retailers and businesses on public marketplaces. Just identify a product or area with high demand and then source products that are already available to fill that demand.
Use the following benchmarks when looking for efficient and cost-effective suppliers:
- Shipping: Talk with your manufacturer to determine shipping times and costs. You can also check to see if there are free shipping offers or minimum order requirements.
- Turnaround Times: Ask your manufacturer how long it will take to get your initial order and restock orders in the future. This will help you create an effective inventory management system and keep your products in stock—and our guide on How to Organize Inventory for Small Businesses can help you in this area.
- Manufacturing Times: Know how long your supplier takes to make your goods, and always look for more efficient ways to get your items.
- Hidden Fees: Ask your manufacturer upfront if there will be any fees outside of manufacturing and shipping.
Step 3: Create a Pricing Strategy
Defining a pricing strategy can make or break your business. Overprice your items, and they won’t sell. But, if you underprice, your business will lose profits and might not have the margins to stay afloat.
Luckily, when it comes to wholesaling, there is a relatively set-in-stone rule for pricing. Generally, you should offer retailers a 50% discount on the retail price. For example, if the Manufacturer’s Suggested Retail Price (MSRP) is $50, the wholesale price would be $25.
If there is no set MSRP price, you will have to do market research to determine the value of your product. Learn more in our guide on how to price products.
Typically, wholesalers set a profit margin at or above 50% to be profitable and competitive. Your profit margin is the money you have left once you remove all the associated costs. So, say the unit cost of an item is $15. You would then set the wholesale price at or above $30 to yield a 50% margin. The item would then be sold to customers at $60. If you need help calculating your margins and pricing your products, use our Retail Margin & Markup Calculator.
Set Minimum Order Quantities
One of the biggest reasons that wholesaling is such a lucrative business model is that you sell at scale. Setting minimum order quantities (MOQs) requires retailers to buy your products at specific minimum amounts to be eligible to purchase. This ensures wholesalers can profit and turn over their goods when buying in bulk.
MOQs can also deter consumers from purchasing wholesale if you sell on an open platform like AliExpress and Alibaba. You can learn more about how they stack up in our AliExpress vs Alibaba comparison.
It’s common for wholesalers to offer special samples or test products so that retailers can see the products in person before committing to a large wholesale order. If it’s a custom or labor-intensive product, selling these samples at market value or higher is customary. If it’s not, it’s common to offer samples for free and charge retailers shipping.
Some wholesalers will scale their prices with order quantities to incentivize larger purchases while maintaining their margins (more on this below). For example, you could offer 100 umbrellas for $6 each or 500 for $8 each. The margins might go down slightly, but you are selling in high numbers, so your profit is still high.
However, you should consider several pros and cons when deciding whether to set your MOQs high or low.
Must have a lot of products on hand all the time
Requires few items on hand
Fewer orders = lower logistics costs
More orders = higher marketing and sales budget
Fewer orders = lower logistics costs
Higher inventory turnover
Another policy you sometimes see is a minimum order price, or a certain dollar amount the retailer must spend to be eligible to make a purchase. In this case, quantity requirements may or may not apply. For example, a retailer could buy one of several items to meet the dollar minimum or still be required to meet minimum quantity requirements and order price.
Step 4: Write Your Policies
Unlike B2C retailers, wholesalers do not let everyday consumers buy their products—instead, they work with other businesses and operate under buying and payment terms. These terms set things like payment procedures and timelines and shipping fees. As the seller, the wholesaler needs to set policies for purchasing, payments, and timelines that both they and the businesses buying their goods are to follow.
To protect yourself against losses, you should set payment terms for your retail customers to follow.
- Extended or Net Terms: This tells retailers how long they have to pay you for your goods. The time frame can either be based on when the retailers receive your products or when you ship them out. Extended terms are expressed as “Net” + the number of days until payment is due. For example, the most common extended terms are expressed as Net 30, Net 60, and Net 90.
- Extended Terms With Prompt Payment Discount: This offers customers a discount if they pay for your goods in a certain amount of time before the extended terms are over. This policy is expressed as X/A Net D, with X being the discount amount, A being the days to qualify, and Net D being your extended terms. So, 2/10 Net 60 means you give a 2% discount if the retailer pays for the items in 10 days under the 60 days extended terms.
- Proforma: Another payment option, this is where you ship your products out immediately upon receiving payment.
- Advanced Deposit: This is when customers have to pay off a portion of their purchase upon ordering and the rest when it is due.
- Sale or Return (SOR): This policy says that retailers only have to pay for what they sell and can return the units that are not sold.
You need to determine who will take on the shipping cost. If it is the customer, you may want to allow them to choose the vendor. However, if your goods are fragile or you operate at a large scale, you might want to restrict their options or even require a certain shipper.
If you are taking on the shipping cost yourself and offering discounted or free shipping, you should seek out a contract with a shipping company that is both reliable and affordable. Additionally, you should be sure that they can provide a pickup schedule that will work with your production timelines and quantities.
As a wholesaler, you’ll be shipping larger quantities than a traditional retail business. ShipBob is our pick for the best third-party logistics company for small businesses. You can see if it fits the bill through our in-depth ShipBob review.
If you decide to allow retailers to pay for items after they place their orders, you will need to determine how you will collect those payments. You can do this through an invoice system where you send buyers a tab they must pay by the due date. Alternatively, you can use a delayed payment app like Afterpay to send invoices and automatically charge buyers on the set payment dates.
Step 5: Photograph Your Products
The next thing you want to do is photograph your products for your website. For this, you will want to get a nice camera, create a clean backdrop where your products will stand out, and take photos of all the important product angles. The biggest things you want from your photos are that they give retailers all the information they could want about your products and present your merchandise in the best light. If you want to DIY your photos, check our guide on how to take quality product photos at home.
If you are using Faire as your wholesale marketplace, this is your last step—Faire will create your product pages for you after you submit your photos and line sheet. Otherwise, you will upload your photos to your marketplace shop page and create product pages from there.
Step 6: Create Your Line Sheet or Inventory Catalog
A line sheet is the catalog buyers will use to place an order on your products; it displays all your product images and their descriptions, wholesale prices, IDs or names, and any other important information. Line sheets are supposed to give buyers an overview of everything you offer, so keep your formatting simple and clean for easy reading.
To make a line sheet, gather all the product images you took in the prior step, determine all pertinent information you need to include, and create a catalog. You can manually create a catalog in Photoshop, through a graphic designer, or via a platform like NuOrder that will create and update your line sheet. Book a demo with NuOrder.
While keeping things orderly will help with readability, you also want to be sure that your line sheet includes some branding. This will help retailers determine if your products are a good fit for their business, and will give you a chance to present your brand when buying decisions are being made.
If you want to adopt inventory management software to keep track of stock, offer insights into your future demand, send low stock alerts, and help you run your business more efficiently, check out our guide to the best inventory management software.
Step 7: Find Your Buyers
Once your line sheet is complete or your inventory is uploaded into your software, it’s time to find your retail buyers. Depending on your product market and the customer base that you want to reach, you will likely adopt different strategies for getting your brand in front of buyers.
Don’t forget to look beyond your current industry. If you are expanding your existing brand, consider what areas of retail you can expand your products into. Say you sell jewelry, look beyond jewelers to gift stores, museums, and boutiques.
Below, we will look at six options for getting your products in front of retailers so you can ultimately make sales.
Drive traffic to your website by running ads on Google and using good search engine optimization (SEO) techniques. Smart advertising algorithms will help your website end up in front of your target market, and good SEO will make it easy for people to find your website online. You can also hire marketing professionals to help set your website up for success.
If you are an established brand, you can also use your existing website as another channel to drive wholesale traffic. Simply leave a link for wholesale inquiries on your existing website, and let your normal traffic bring in wholesale buyers.
We do not recommend relying on just your existing website traffic to bring people to your wholesale channel unless you are a large brand. The customers that your existing website attracts are regular shoppers, not wholesale buyers, so you will still need to push your wholesale website separately to bring in enough of the right people.
Another option for reaching buyers and acquiring sales is to pick up the phone, send out some emails, or get out on the town to pitch your products to complementary businesses.
For written pitches, keep your verbiage under 10 sentences, enumerate reasons why your products would be a good fit, and include some product information.
Alternatively, hand out business cards when you talk to business owners in person—there are several ways to get free business cards. Also, bringing product samples with you is especially helpful, especially if your merchandise requires a demonstration. You can also try calling businesses to tell them about your goods.
At the end of the day, when it comes to pitching your products, it’s a numbers game. The more people you are able to reach, the higher the likelihood that you acquire a sale. Be persistent, and contact as many businesses as you can.
A huge advantage of selling products wholesale is not needing a large pool of customers to scale, unlike when selling directly to consumers. The key is finding the right retailers to partner with or sell wholesale to. Partnering with complementary businesses is a good marketing strategy as they can recommend your business to their retail buyers—allowing for more exposure and sales.
To find the right partners, consider the companies most capable of complementing your existing offering. This must work both ways, as potential partners would be looking for something advantageous for them, too. For example, if you sell baby cribs, consider reaching out to a wholesaler that sells baby bed linen to be able to pitch both when cross-selling.
Incentives encourage buying, especially if you sell wholesale. If you have started directing traffic to your website or soliciting your products, increase your conversion rates with incentives.
Incentivizing usually means giving bigger discounts when buying more products. Still, it can also include:
- Setting low minimum order requirements, which encourages first-time buyers to purchase and test your products
- Offering free shipping with a set purchase amount
- Providing multiple payment terms
- Offering bundle deals
- Giving customers and potential buyers free samples and testers
- Providing free POP or other displays with certain quantity purchases
- Sell-through or money-back guarantees
One of the more traditional wholesale selling methods is to attend trade shows. These are buying events where a collection of wholesale brands gather so that retailers can view their merchandise and make large purchases, often for a season or a quarter.
Use a trade show calendar, or wholesale directly, to find a show that suits your brand. You want to be sure that you are joining a show that caters to your target market, so look for similar or complementary brands when selecting one that is right for you.
Once you acquire a showroom or stall at a trade show, use visual merchandising techniques, signage, and strong retail marketing strategies to make your quasi-storefront appealing and draw people in. Remember, you are going to be in a space chock-full of competing brands—be sure that you do all that you can to make your business stand out.
Popular trade shows include:
- ASD Market Week
- NY NOW
- Outdoor Retailer
- Toy Fair New York
- Las Vegas Souvenir & Resort Gift Show
- Best Retail Trade Shows: While written for buyers, these shows are highly-trafficked and also a good option for sellers.
As covered earlier, wholesale marketplaces are a great place to get your products noticed and streamline your operation. There are a lot of different marketplaces to choose from—and just like tradeshows, you should be sure that you are choosing one that will attract your target market. Look for similar brands or complementary products when choosing a marketplace to ensure you are attracting the buyers you want and that the shopping experience is streamlined.
Popular wholesale marketplaces include:
Alternatively, you can reach retailers by applying to join community groups such as The Boutique Hub. Sign up for The Boutique Hub.
Selling wholesale is an extremely lucrative business model that focuses primarily on brand development and product enhancements rather than direct customer sales (unless of course, you are both the wholesaler and the retailer). Creating a wholesale business looks different from starting a retail business, and following our guide can get your business off the ground and start making sales.