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Those in wholesale purchase goods from a distributor and pass them to a retailer to be sold to the end-user. Wholesale goods suppliers source trending products to make sure that they can supply the most up-to-date goods to retailers. When a trend is identified, those in wholesale will research and source the most cost-efficient products, choosing from a multitude of manufacturers and distributors. Wholesale operators then supply these products to retail businesses for purchase.
By buying products in bulk you can save money through discounts that wholesale get with larger orders. This means that you can get products for less while selling them for more. Depending on how much you invest initially you can get ahead of competitors through buying and selling in sheer volume.
It can be hard to navigate the wholesale environment as some wholesalers work independently, while others work closely with one or two producers. Overall a wholesale businesses can fall into one of three categories, or types.
A wholesale pricing is the price a manufacturer charges a wholesale to bulk order from them. Because wholesale is buying in bulk a significant discount can be sought from the manufacturer making it possible for a wholesaler to make a profit through retail markup.
Retail markup is the pricing on wholesale products a retailer is charged for a product minus the wholesale price of the product. For example, if a wholesale buys 500 products for a total of $2,000 each product cost $4. The wholesaler might decide to sell these products in groups of 50 to retailers for $400 per 50 products. The price per product has now increased to $8 per product meaning that a wholesaler will make $4 profit per product or $2,000 for the whole shipment. This is what makes wholesale profitable.
Wholesaling is great as it gives you the ability to buy and sell when and where you want to. You can even choose how to sell your products, so this is a great option for an entrepreneur with enough startup capital.