5 Easy Steps on How to Start a Wholesale Distributorship Business

5 Easy Steps on How to Start a Wholesale Distributorship Business

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Home Page > Shopping > Clothing > 5 Easy Steps on How to Start a Wholesale Distributorship Business

5 Easy Steps on How to Start a Wholesale Distributorship Business

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Posted: Sep 02, 2008 |Comments: 0
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So you wanted to learn how to start a wholesale distributorship business? Well firstly, you should know that the wholesale distributorship industry has become a famous trend in the world of business, now this you know. Today, total U.S. wholesale distributor sales are approximately .2 trillion. Since 1987, wholesale distributors’ share of U.S. private industry gross domestic product or GDP has remained steady at 7 percent, with segments ranging from grocery and food-service distributors to wholesale clothing, furniture and home furnishings wholesalers.

Now, some have said that putting up another wholesale distributorship business is a waste of time because of the huge number of competitors all around us. But whenever I hear this talk of discouragement, I always just think of a phrase I learned when I was still in preschool, “There’s always room for Jello”. So whenever they say that there isn’t much room for another wholesale distributorship business, that there’s just too many, I just think of that phrase and add a little twist in it.

The Life as the Wholesale Distributor

Now all of us know perfectly that manufacturers are responsible in “manufacturing” the products which the retailer sells them to the end user. So where does the wholesale distributor fit in this process? Well let’s take for example a t-shirt, which the manufacturer manufactured then packed, then sold to clothing retail stores, which in turn sells it to customers or to the consumers. But between the processes where the t-shirt is being delivered to the retailers, is where you, the distributor, come in, to move the product from manufacturer to market.

Different distributors work differently from one another. Some distributors work much like the retailers, selling their goods directly to the consumers or the end users. Others are known as merchant wholesale distributors; they buy products from the manufacturer or other source, then move them from their warehouses to companies that either want to resell the products to end users or use them in their own operations.

Wholesale trade includes establishments that sell products to retailers, merchants, contractors and/or industrial, institutional and commercial users. Now there are three types of operations that can perform a Wholesale trade which are the wholesale distributor (that’s you); manufacturers’ sales branches and offices; and agents, brokers and commission agents.

As a wholesale distributor, you will be in charge of running an independently owned and operated firm that buys and sells products of which you have taken ownership. Mainly, these operations are run from one or more warehouses where inventory goods are received and later shipped to customers.

Confusing? Well to put simply, as the owner of a wholesale distributorship, you will be buying goods to sell at a profit, much like any retailer would do. The only difference between the a wholesale distributor from a retailer is that you’ll be working in a business-to-business realm by selling to retail companies and other wholesale firms like your own, and not to the buying public or the end user.

Steps in Starting a Wholesale Business

Now that you know what life you’ll be experiencing when getting into the world of wholesale distributorship, let’s talk now about the steps that you must take before starting your wholesale distributorship business.

Step 1: Choose the Industry that Really Suits You

The title of the first step says it all; you should choose an industry that really suits you. Let’s say you like clothes, then a wholesale clothing business is perfect for you, or if you are into wines then a wine wholesaler is the appropriate wholesale distributorship for you. It’s very important that the industry you chose is what you really like. It’s hard to make a shift of primary industry when you’re already in it.

Now if you can’t decide on what industry to choose from, here’s a small thought: Every year, U.S. retail cash registers and online merchants ring up about .6 trillion in sales. About a quarter of that comes from general merchandise, apparel and furniture sales or GAF. To measure how large the scope of GAF, try to imagine every consumer item sold from foods to building tools, and then remove the cars, building materials and food. The rest, including computers, clothing, sports equipment and other items, fall into the GAF total.

Such goods come directly from manufacturers or through wholesalers and brokers. Then they are sold in department, high-volume and specialty stores, all of which will make up your client base once you open the doors of your wholesale distribution firm. So having a talent for choosing the hottest trends in clothes and starting a wholesale clothing business isn’t bad at all.

But there are still some problems that you’ll face once you open that door, one of which is consolidation. For wholesale distributorship starters such as you, consolidation is rampant in this industry. Some sectors are contracting more quickly than others. To combat the consolidation trend, many independent distributors are turning to the specialty market. Many entrepreneurs are finding success by picking up the golden crumbs that are left on the table by the national companies, this you must take into mind. As distribution has evolved from a local to a regional to a national business, the national companies can’t, or sometimes don’t wanted to, cost-effectively service certain types of customers. Often, small customers get left behind or are just not profitable enough for the large distributors to serve. So this is where you should be targeting to stay clear out of site of those big wholesale distributors.

Learn how to manage and maintain a wholesale clothing business with what Seven Wholesale can provide with their collection of highly maintained and updated collection of clothing lines.

Step 2: Choose Your Suppliers Very Wisely

Suppliers are very important in your line of business. One of the initial steps that wholesalers take before venturing through this line of business is defining a customer base or the vendors and locating reliable sources of product or the supplier. We’ll talk about the customers later on.

The process of the product getting to the consumers a chain which is a set of resources and processes that begins with the sourcing of raw material and extends through the delivery of items to the final consumer. You position in this supply chain will involve matching up the manufacturer and customer by obtaining quality products at a reasonable price and then selling them to the companies that need them.

In selecting the right supplier for your wholesale distributorship business, you will have to get in touch with manufacturers who will be willing to appoint you as a wholesaler for their products. Many companies will have sales targets for you to meet – so think carefully before deciding on any one.

But in some cases, you will have to get in touch with the company’s distributors if they are not willing to supply directly to you. In this case, there will be a division in profit margins, so you will have to factor in these calculations before you can proceed in dealing with them.

Now if you supplier is the manufacturer itself, then its necessary for you to check out the policies of different manufacturers, including how they plan to handle any goods returned back to them due to defects or for any other reason. You will also need to check their after-sales service policies. It is best to steer clear of any manufacturers that you cannot get a clear answer from, or end up with a lot of inventory that you just can’t sell.

Check out what Seven Wholesale and its collection of wholesale clothing can provide you with your urban and fashion clothing needs.

Step 3: Find an Appropriate Location for your Shop and Warehouse

In setting up your warehouse or your shop, your needs will depend greatly on what type of product you chose to specialize on. If you chose a wholesale clothing business, you could run it in your own home and store