How to Be a Wholesale Distributor

The United States Industry and Trade Outlook published in conjunction with the United States Department of Commerce defines a wholesaler as an establishment that sells products to retailers, merchants, contractors and to institutional and commercial users [source: NTIS]. Wholesalers can sell any product, including food, electronics and furniture. As a wholesale distributor, you will be running an independently owned and operated business that buys product and sells products for which you have taken ownership. Usually, such a business operates out of a warehouse where the goods are received and later shipped to customers for a profit [source: Fein]. Let's take a detailed look at how to become a wholesale distributor.

  1. Get an education. If you want to run a business you must have knowledge about basic business rules. Go to college and take courses in accounting and business administration.
  2. Decide what you want to sell. You can distribute almost anything, but it pays to be knowledgeable about the product you're selling.
  3. Figure out if the business can be profitable. Contact manufacturers of the products and find out the exact costs of every item. Determine the exact shipping costs from the manufacturer to your warehouse, as well as from your warehouse to your customer. Don't forget to include the cost of the warehouse plus any incidental costs. Finally, add on a profit for yourself. When you have all this information and have determined your final cost, find out what you can sell the products for. Consider whether the market will pay the price you would like to ask.
  4. Open up a business account, apply for a tax identification number, and obtain any necessary licensing.
  5. Arrange for funding, if you think the business can be profitable. Calculate how much money you will need to carry you for at least three months.
  6. Get a warehouse, place your first order and run with it [source: SBA].