Buying from Wholesalers

Q: If I'm selling on eBay, will real wholesalers work with me? When should I tell a supplier that I sell on eBay? Should I tell them at all?

A: Not all wholesalers will work with eBay sellers for various reasons. Some manufacturers fear their items will be devalued in the market, and others have strict guidelines (especially expensive brand names) for where their products can be sold. As an eBay seller, you don't want to waste time setting up accounts, only to discover a supplier won't allow you to sell their products there. Before you set up an account with a supplier, you will want to ask the supplier if they allow their products to be sold on eBay. It is better to make sure in advance rather than having your account frozen or shipments not delivered.

However, there are many wholesalers (especially in niche markets) that understand the power of the eBay market and are very willing to work with you. Worldwide Brands (worldwidebrands.com) researches wholesalers daily specifically looking for wholesalers that will work with eBay sellers and online retailers. The majority of the suppliers listed in their OneSource database will work with eBay sellers.

Q: What are the differences between the various methods of product sourcing (drop ship, light bulk, large-volume wholesale, liquidation, and importing)?

A: "No single sourcing method will make you truly successful. Using only one method is like driving a car with only one wheel; four wheels works much better. Every online seller, especially an eBay seller, needs to develop a product sourcing strategy," according to Robin Cowie, President of Worldwide Brands Inc. (worldwidebrands.com).

Most eBay sellers source their product from one of six sources:

1. Local sourcing: The seller finds products from local sources such as the attic, the basement, the garage, garage sales, flea markets, local thrift shops, and outlet stores.

2. Drop ship: A product-sourcing method whereby you sell on eBay as a retailer of a supplier's product line; however, the supplier ships products one at a time directly to your customer from the supplier's warehouse. Even though you are the seller of drop-shipped goods, you do not have to maintain an inventory or handle shipping. You do, however, handle the collection of the money from the customer and pay the supplier the wholesale cost for the product purchased. Drop shipping is considered an ideal way for elderly and disabled people to make an income selling on eBay (to learn more about a nonprofit organization dedicated to helping disabled people drop ship on eBay, check out the Disabled Online Users Association at doua.org). Drop shipping can also be used for testing product ideas on the market, testing the supplier process, and carrying larger, heavier items in your store selection for which you would not normally want to handle the shipping.

3. Light bulk: A product-sourcing method whereby the seller purchases from a wholesaler in minimum quantities for less than $500—ideal for storing in a garage, basement, or a storage unit. The seller manages all interactions with the customer and the product, from collecting the payment to handling the inventory to shipping to the customer. The profit margins increase with this product-sourcing method because wholesalers can offer larger wholesale discounts on product.

4. General wholesale/large volume: This is similar to the light bulk method; however, the quantity of product is much higher. The larger the quantity purchased directly from the wholesaler, the higher the discounts received by the seller. When a retailer buys in really large volumes, the supplier will add volume discounts, depending on how much money the retailer is willing to spend. The more money you are willing to spend on inventory, the bigger your volume discount; the bigger your volume discount, the cheaper you can sell the product and the larger the profit margins that are obtainable!

5. Liquidation: A product-sourcing method whereby a seller can source commercial surplus inventory and closeout products through wholesalers.

6. Importing: This means sourcing products from foreign countries. Importing can be done individually, through wholesalers that handle the importing process, or through customs brokers you pay to handle importing paperwork.

To learn more about product-sourcing basics, check out Worldwide Brands' free educational video course available at worldwidebrands.com/ productsourcingvideo.

 
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