How You Can Find Real Wholesalers
(Not Middleman) For Any Products
Dirt Cheap For Maximum Profits

This is Something That Nobody Is Teaching in This Industry. Why? Because Most of Them Are Middlemen. In Fact Real Wholesalers & Dropshippers Are Almost Never Exposed

by Peter Yoon

Please read this entire article and I'll reveal exactly how wholesale industry works and how the big players source their product and quickly generates six or seven figures online. I also promise that this is 100% pure content and I won't sell anything on this page.

This information could worth thousands of dollars if you apply it.

What is Product Sourcing?

Product Sourcing is quite simply when you find the products that you want to sell in your business.

The thing I always find surprising is that most people leave this bit until last! They know they want to set up an online business, they know what they want to sell, spend loads of money setting up their website and then guess what? They can't make it work because they haven't figured out one of the most important bits of their business - sourcing the right products at the right price.

Here, we look at who the key partners are, explain what they do and identify how to find them.

Explaining the Sales Process

There are 5 key partners in the manufacture to sale process:

  • Manufacturer of Product
  • Factory Authorized Distributor
  • Wholesaler
  • Middleman
  • Retailer

In order to make a profit from selling online you need to identify which of the partners you can substitute yourself for, and so achieve the greatest profit margin available. During the manufacture to sale process each of the key partners will add on their own profit margin, the fewer partners the more profit available for you!

I would suggest starting off with a key goal in mind - get as close to the manufacturer as possible! If you have this tool you can really start to progress along the line to identify the other partners. By identifying the other partners you can begin to understand where you could slot into the process. Obviously the higher up the ladder you are the greater your profit margin will be.

Let's take a look at the key partners in the process:

  • Manufacturer - They normally don't market their products, which is why they are hard to find in search engines. Their job is simply to manufacture or create the products and sell in large quantities to wholesalers and factory authorized distributors. It is extremely rare for manufacturers to sell to retailers directly and even more so for them to drop shop (I'll explain a little later about drop shipping)
  • Factory Authorized Distributor - Sometimes the Manufacturer chooses to insert an authorized distributor into their sales process. These distributors are normally chosen to reduce the amount of wholesalers a manufacturer has to deal with, and sell both to other wholesalers and retailers.
  • Wholesaler - These partners usually carry multiple lines of products and are more marketing focussed than the manufacturer. They will spend money on advertising and search engines and are usually the organisations you find easily. If wholesalers are actively marketing then they will be adding on costs to the products prior to selling in order to recoup their advertising spend. Take into account that all of these activities will add on to the cost of your end product to take to the market and ultimately your profit margin. Real good quality wholesalers are hard to find and because of this you can normally make a better profit margin retailing their goods.
  • Middlemen - These partners normally slot themselves in between the wholesaler and the retailer. Often buying in bulk from the wholesaler then selling in smaller quantities to the retailer. You many find that many "middlemen" will call themselves "wholesalers" and these partners are usually who you will find easily on internet search engines.
  • Retailer - The partner who sells their product range direct to the public.

 

Wholesalers Explained

If you are going to be serious about your business then finding the right wholesaler is critical. You need to find the right suppliers to ensure that you earn a good profit margin. Don't believe any of these get rich quick scammers, who promise you a quick six figure income with the "secrets" they reveal. What you need to do is to approach this whole process as a set of building blocks, building each piece of knowledge on top of each other until you have achieved the end result.

The first and probably most important point to make is that there are scams everywhere when it comes to sourcing and getting a good price for products online. No surprise that the phenomenal success of eBay has created a huge market for fraudulent practices and if you didn't have this guide you could expect to undergo a huge learning curve - which would also cost you a lot of time and money. The good news is that I have done the research and the learning and will share my experiences with you!

Wholesaler Pricing

One of the factors that most people struggle to understand is a wholesalers pricing structure. The key to getting the best prices is to always deal with the factory authorized distributor. Here's why¡¦

When a wholesaler is appointed as a factory authorized distributor by the manufacturer then you can bet that they've undergone a rigorous screening program. The manufacturer wants to sell their products with the least possible hassle, they just want paid and to have good wholesalers sell their products. The demand for contracts amongst factory authorized distributors is high and they will usually follow the manufacturer demands in order to retain their contracts.

The manufacturer will normally set a wholesale price on their products, and this is the amount the wholesale supplier should charge you as the retailer. With me so far?

In order to make money the wholesaler will buy products from the manufacturer at a price less than the one set for onwards sale to the retailer.

The profit margin that the wholesaler actually makes from bulk sales can be as low as 8%. In order to make enough profit to stay in business the wholesaler has two sales tools they can use:

  • Sell a large proportion of bulk items to make their 8% a profitable venture
  • Use a technique known as "Key Pricing" to offset their low profit margin set by the manufacturer.

Key Pricing is where wholesalers make most of their profit margin. The manufacturer may give an additional discount on their products of say up to 30% below the manufacturers wholesale price.

Wholesalers Distribution Methods

Wholesalers will distribute product to the retailers in two main forms:

1) In Bulk
2) Drop Shipping

Let's look at the methods and what they mean to you.

Bulk Ordering

Imagine you wanted to buy 20 crates of designer shoes. You'd need to find the money to buy them first of all and then find somewhere to store them. Unless you've got a very big garage and deep pocket I'd say that you would need to be some way into your business before considering bulk ordering. Hey, that's just my opinion. Imagine your partner's response to a garage full of shoes!

When the manufacturer sells their products to the wholesaler they usually come in case lots. These case lots are made up in multiple item lots and intended to be sold in that exact same form. When you place an order with a wholesaler they are intending to just stick an address label on the front and use a delivery service to get it to your destination. That is the reason why most wholesalers have a minimum order, in order to make their guaranteed minimum profit level set by the manufacturer and stay in business!

Drop Shipping

Drop Shipping is quite simply a process where your customer orders are shipped direct from the wholesaler, meaning you don't have to hold any stock. It is relatively unusual for the real wholesaler to drop ship and that's where the middleman comes in.

Remember the sales process we discussed earlier and how the manufacturer would appoint a Factory Authorized Distributor / Wholesaler and their methods of profit.

Now just imagine again how much of that small profit margin would be depleted if the wholesaler was to start dividing up the Manufacturers "Case Loads". They'd have to employ staff to break up the "Case Loads" and then re-package them. These processes would all add to the cost price of the items and very quickly deplete the low profit margin the wholesaler achieved.

If a wholesaler agrees to drop- ship for you then remember that the price of your products will increase to off-set the costs to the wholesaler.

There are advantages and disadvantages to this process which largely depend on which products you choose to sell. Let's examine the pros and con's to help you to decide if this method is suitable for you:

Why Drop Ship?

  • You can start your business with very little money.
  • You don't have to stock inventories.
  • Drop Shipping can save you time and money to concentrate on other business activities, such as marketing.
  • Ideal method for testing if your chosen product(s) have a market and will sell.
  • Drop Shipping is good if you are just starting out and want to establish your business with a good product range.

Why NOT to Drop Ship?

  • The benefits outlined above entail low profit margins, and you may find it difficult to make an overall profit.
  • The drop shipper will add on their profit margin to the wholesale cost and may end up making more money than you!
  • Loss of control - your business totally depends on the reliability of the drop shipper.
  • Marketing drawback - you cannot add bonus items or letters to gain customers for additional or back-end sales.
  • Handling returns can cost you more money than the profit you made on the item originally and create a huge administration headache.


How Does Drop Shipping Work?

Drop Shipping has a few key processes that aim to get you from the point of sale up to your customer receiving their products, and you receiving your payment!

Here is an example of how it progresses:

  • You create your own online website business or eBay store and have the ability to accept online payments.
  • You find a wholesaler willing to drop-ship items for you. Check out www.worldwidebrands.com as a great resource
  • Create your retailer account with the wholesaler or wholesalers of choice who can supply the products you want
  • A customer visits your online business and makes a purchase using their credit card which includes a shipping fee
  • You forward your customer order details to the wholesaler
  • The wholesaler sends your customer order out in the post under your online business name
  • The wholesaler bills you for the wholesale price, for example $50
  • Your customer paid you $75, you make a profit of $25

Overall I would urge you to carefully consider the reasons to or not to Drop ship. Many people see it as an easy way to launch their own business without ever really considering its potential drawbacks. Only you can decide whether it is right for you.

What I would suggest is to:

  • Use drop shipping as a way into your market when starting your business.
  • Use drop shipping for rare items. It is easier to make a profit as there will be less competitors and hence less perceived value of your product. You can charge what the market is willing to pay, whilst protecting your profit.

In the next section I'll reveal exactly how you can locate real manufacturers and real wholsalers. And how to immediately spot scams and middlemen.


How to find wholesalers and manufacturers

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