How to Be a Wholesale Distributor

By: HowStuffWorks.com Contributors  | 

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].

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Originally Published: May 25, 2011

Wholesale Distributor FAQ

Can I buy wholesale and resell online?
Purchasing products from wholesale suppliers (both tangible and online) to sell online on e-commerce platforms like Amazon or eBay is a very lucrative business and has become a source of income for many people around the world. In fact, it’s growing so much that e-commerce has been forecasted to be worth $4.9 trillion in 2021.
How do I find wholesale vendors?
The easiest method of finding wholesale distributors is by searching online and contacting companies to collect information about their policies, required quantities, costs and so on. Smaller companies typically don't partner with distributors and sell directly to resellers and end-users, so look for larger or wholesale-only companies.
Do I need an LLC to buy wholesale?
You do not need to be registered as an LLC or a corporation to buy wholesale or resell. You do need to register your business with the government, but you can do so as a sole proprietorship.
Can the general public buy from wholesalers?
Traditionally, wholesalers only sold to clients that are resellers or businesses that resell the goods to consumers. However, many now sell to the general public if they can prove that they will use the goods for commercial purposes and they can meet the minimum order requirements.

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