How to buy wholesale for a small shop
Buying wholesale means purchasing goods in quantity from a maker or distributor at a lower unit price, then reselling them at retail. These steps take you from the first supplier conversation to a working reorder system, with the math that shows whether a product earns its shelf space.
Get your paperwork in order
Most wholesale suppliers sell only to businesses, so expect to prove you are one before you see prices. The key documents are usually a seller’s permit from your state, sometimes called a sales tax permit, and a resale certificate, which lets you buy inventory without paying sales tax because you will collect it from your own customers.
Many suppliers also ask for a tax ID such as an Employer Identification Number, which the IRS issues free of charge, along with your legal business name, address and a website or photos of your shop. Keep copies in one folder so each new account takes minutes to open.
Find suppliers worth contacting
Buying directly from manufacturers usually brings the best prices and the highest minimums. Distributors carry many brands with smaller minimums, and independent sales reps can open several product lines for you at once.
- Check the packaging of products you already like for the maker’s name.
- Look for a wholesale or stockist page on brand websites.
- Walk trade shows in your category and collect line sheets.
- Browse online wholesale marketplaces, many of which allow small opening orders.
- Join an industry association for member directories and introductions.
Learn the minimums and case packs
Suppliers set a minimum order, either a number of units or a dollar total, and the minimum for an opening order is often higher than for reorders. Many products also ship in case packs, so if mugs come six to a case, you order in sixes.
Ask for the line sheet, which lists wholesale prices, suggested retail prices, case packs and minimums in one place. If a minimum is too high, ask whether you can mix products to reach it.
Do the pricing math before you order
Keystone pricing means doubling the wholesale cost, so a candle that costs you $12 retails for $24. It’s a common starting point rather than a rule, and suggested retail prices often land near keystone.
Markup and margin are not the same. Markup is profit as a share of your cost; margin is profit as a share of the selling price. That $12 candle sold for $24 carries a 100 percent markup but a 50 percent margin. To hit a target margin, divide cost by one minus the margin: at a 60 percent margin, $12 divided by 0.4 gives a $30 price.
Count your landed cost
Landed cost is everything it takes to put a product on your shelf: the wholesale price plus freight, packaging, payment fees and, for imports, duties and customs brokerage. If a case of 12 costs $120 and shipping adds $24, each unit costs you $12, not $10, and that is the number to price from.
If you import directly, you may be the importer of record, responsible for clearing goods through U.S. Customs and Border Protection and paying duties at rates that can change. Ask domestic suppliers whether freight is free above a certain order size, since that threshold can shape what you order.
Vet suppliers and negotiate terms
Order samples before committing, and ask for references from other retailers who carry the line. Expect to prepay by card at first; once you have a payment history, many suppliers will offer net 30 terms, meaning the invoice is due 30 days after its date. A term such as 2/10 net 30 adds a 2 percent discount for paying within 10 days.
Read the pricing rules too. Many brands enforce a minimum advertised price policy, which limits the lowest price you can show in ads or online, and breaking it can cost you the account. If you sell children’s products, ask for the Children’s Product Certificate that U.S. manufacturers and importers must issue under Consumer Product Safety Commission rules. If you import directly, that duty is yours.
Walk away from any supplier that shows these warning signs.
- Payment accepted only by wire transfer or cryptocurrency.
- No verifiable business address or registration.
- Prices far below every competitor’s.
- Refusal to send samples or share references.
- Pressure to place a large order right away.
Start small and set reorder points
Treat your first order as a test. Buy the minimum, track how fast each item sells, and put more money behind proven sellers instead of spreading it across dozens of untested products.
A reorder point tells you when to buy again before you run out: average daily sales times the supplier’s lead time in days, plus safety stock. If you sell two units a day, delivery takes 10 days and you want six spare, reorder when you’re down to 26. Review sales monthly and mark down slow movers before they tie up cash for a whole season.