Update – Starting a Wholesale Business

I have not forgotten about the “Starting a Wholesale Business” series / project. I’m honestly just having a very difficult time deciding what product to sell. For anyone reading this, bear with me while I write out loud…

I’m trying to stay away from electronics because I don’t want to deal with returns. I want a product that is very unlikely to be returned because it’s not functioning properly. I’ve looked into iPods and other consumer electronics, but to sell major brand names, you’ll probably need to become an official distributor of that company if you want to make any kind of profit. For simplicity’s sake, I’m avoiding this as well.

The product needs to be fairly light and small. I don’t want to sell a $20 product and charge $15 for shipping. If I could sell volcanic rocks, that would be ideal.? Light…small…and not likely to malfunction.? Hmmm….

I have a few ideas that I’m kicking around, but nothing is really inspiring me yet.? I’m hoping to make a decision by this weekend.? If you’re the charitable kind, you could go to the product selection part of this series and leave a comment. I’ve had quite a few views of the mindmap, but no one has made any additions yet.? Maybe I need to go back and re-read that post and follow some of my own advice.

Starting a Wholesale Business – Finding a Product to Sell

Now that we’ve decided to start a wholesale business, we need a product to sell. This post will take us through the process of determining what product to choose.

If you have any ideas for a product as you read this, you may want to jump over to our mind map and jot them down. Just click the link or image below.
MindMap of Product Ideas

Mind Map for Choosing a Product to Sell
Mind Map for Choosing a Product to Sell


First, I want to say that the product you choose to sell should interest you. It doesn’t need to be the greatest love of your life, but you should at least enjoy learning about it. If you’re interested in what you’re selling, it will show in your business and your advertising.


Next, there needs to be some demand for your product. Preferably, a lot of demand. Basically, you should start by making a list of products you would be interested in selling. From that list, check out what’s selling on Ebay. I’m not suggesting that you market directly to the Ebay crowd, but they’re big enough that you can get a good idea of the overall market by looking at what’s hot there. A good service for researching the ebay marketplace is Terapeak.? They’ll show you pricing trends as well as average listing prices, selling prices, and how many listings result in a sale.? Go through your research and pick out the products with good sell rates.? (Ratio of listings to sales.)? This is your new short list.
* Update: You may also want to check out pulse.ebay.com for market research directly from eBay.


With the short product list in hand, we now want to research competition.? It’s great if you found a popular product.? However, if everyone and their mother is selling the same product, you should move on.? Not to be repetitive, but Ebay is still a good place to do this research.? Take your short list and search for each product on Ebay.? Note the number of listings and average prices.? You may also be able to use some of the data you got from Terapeak for this step.? At this point, you want to rank your products by highest demand and least amount of competition.? Unless a product is totally flooded with competitors, take your entire short list to the next step.


What will it take for you to start selling these products?? What is the cost per sale?? If you choose a product that requires a large initial cash outlay, you need to be that much more confident that you can drive enough sales.? Does the wholesale source require some sort of membership fee?? You’ll need to work out all of these costs for each product you plan on selling.? This will probably be the most time consuming part of your research, but it’s very important.? If it costs $1000 to get started selling a $10 product, you’re way behind before you even “open your doors”.? It’s also more time consuming because we need to include another step in this process, which is… finding a supplier.

Finding a Wholesale Supplier

You should start by taking a look at our wholesale sources page.? Even being a fairly short list, you should be able to find a source for most products from someone on that list.? As it’s been said before, SaleHoo comes highly recommended because they have a community of people that review all of the wholesale sources.? If anyone has a supplier to recommend, please leave us a comment.? I’d be happy to add quality wholesale suppliers to our list.


Now that you know the costs involved in buying your product, and you’ve done your market research, you should be able to determine what your customers would pay for your product.? If the direct cost per sale divided by the selling price is over 70%, you better have a very efficient system of marketing, advertising, and order fulfillment, or you’re not likely to realize any actual gains from this business.? When deciding on a selling price, always keep in mind that more comes out of your selling price than just the cost of the product.? You need to be compensated for your time.? You need to pay for advertising and marketing.? You may have hosting and other technology costs.? Forget about it if you have employees.? Don’t be afraid of the math on this one.? If you gloss over the details here, you’re in for a rude awakening.


This is a rather general topic, but you need to make the business as easy as possible for yourself.? You want a product that is easy to sell in that it doesn’t require pages of explanation to get someone to buy it.? You want it to be easy to ship or you’ll lose customers and profit to shipping costs.? You want it to be easy to service.? You don’t want to spend an hour on the phone walking a customer through how to use their $10 product.? It may sound harsh or too impersonal, but you really want to be as hands-off as possible.? Of course you need to have awesome customer service, but ideally, you just want your customers to be satisfied without contacting you.

I’ll be going through this process over the next few days to come up with the ideal product for me to sell.? I would really love to hear your ideas on the process so far.? I want this project to have as much community involvement as possible.? I can do the research and make the decisions, but I’d really love for someone to surprise me.

To be continued…

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Let's Start a Wholesale Business

As a learning experience for everyone, I’ve decided to start a wholesale business, and I’m going to document the entire process throughout the next several posts.? I will take input from all of you and we’ll build a small but well-designed wholesale business.

I don’t know what kind of product(s) I might sell, and that will be the topic of the next post.? The main steps for starting this business will be as laid out below:

1. Choose a product to sell.
2. Find a source for that product. (Part of the decision-making process above.)
3. Pick a domain name that is relevant to the product.
4. Build the site to sell the product(s).
5. Choose a way to receive payments.
6. Determine pricing. Price from suppliers vs. desired profit margin.
7. Advertise and Market our products.
8. Collect the riches.
9. Serve the customers.

I’m sure there will be many items added to that list as this project progresses.? Hopefully, there will be many comments so this can become more of a community project than simply me starting yet another website.

If you’re interested in following along, I encourage you to subscribe to my RSS feed.? That way, you’ll get each step of the process automatically delivered to your reader.? If you read a lot of blogs and you don’t know what RSS is, I suggest you find a reader/aggregator that you like and start subscribing.? (Starting with the SellWholesale blog wouldn’t be such a bad thing.)

China Wholesale vs. Taiwan Wholesale

When I was in the wholesale sunglasses business, I briefly looked into having custom glasses manufactured from China.? However, a few people I talked to recommended Taiwan because they said the quality was better.? They said if I was looking for lower prices, go China, but if I wanted better quality, go with Taiwan.? I received some samples from companies in each country.? In my small sample, the Taiwanese samples felt slightly more solid than the Chinese ones, but I’d really like to hear what you think about this.

Let’s pose this question in two scenarios:

1. If you were having a product manufactured, what country would you use?

2. If you were buying a truckload of wholesale merchandise, what country would you use?

If you have a preference, please post it in the comments and let us know why you made your choice.

Sell Wholesale Products Online

Once you find a good source for wholesale products, how do you go about selling them?

You have many choices for how and where to sell your products, but the product you’re selling has a great impact on where you should concentrate your efforts.


The easiest and least cost-prohibitive route for selling things online is to use an auction site, like Ebay.? You technically don’t even need to know any html to list your item.? However, adding pictures and a bit of html and styling will help tremendously.? The cost for a listing is very reasonable, even if you have to pay a small percentage of your sale price.

Once you have your listing up, you simply wait for bidders.? As buyers find your product, they’ll (in theory) place a bid of the max amount they would pay for it.? However, the “price” of the product only goes up by a small increment.? For example, if a product is selling for $1 and I bid $20, the price would only go up to $1.50.? If someone else bid $5 after me, my bid would automatically increase to $5.50 because my max bid was higher than theirs.? (prices are estimates. I’ll have an Ebay primer soon with more exact information.)

When the auction ends, the highest bidder wins.

That’s it!? Buy your products at wholesale prices…Sell them for a higher price on Ebay…Reap the profits!? What could be easier?


Starting your own ecommerce website is *almost* as easy as selling on ebay.? The steps for gettings started are:

  • Choose a domain:? This is the name of the website where visitors will go to buy your product.
  • Buy Hosting: To put up a website, you need to pay someone to host the files for you.
  • Build your Website: Design it yourself, or use a 3rd-party system.
  • Add your Products: Again, design the listing part yourself or add your products through the 3rd party software.
  • Set up a payment system: Give your customers a quick and easy way to pay you.

That’s about it.? Now for a little mor detail.

1. Choosing a domain:

You’ll want a domain that is easy to remember and relates very obviously to what you’re doing online.? For example, if you sell fire extinguishers, a good domain might be WholesaleFireExtinquishers.com.? Once you decide on a domain, you have to purchase it through a registrar.? A common registrar is GoDaddy.com which sells domains for about $10.

2. Buy Hosting

After you get your domain, you’ll need a hosting account to get your website online.? (This step might be a little out of order since you don’t need hosting until after you’ve built your site.)? The cost for hosting can vary, but you can generally expect to pay $5 to $20 per month depending on your needs.? GoDaddy.com also offers hosting, but I’ve had a better experience through my web host, LunarPages.com.? They’re very reliable, and don’t have some of the restrictions that you have to work around with a GoDaddy account.

3. Build your Website:

This is probably the most difficult of the steps if you’re doing it yourself, or one of the most expensive if you’re paying someone else to build your site.? The cost for a custom ecommerce website starts at about $500 and can easily get into the thousands of dollars.? If you don’t have a huge budget and you’re not a skilled web designer, I recommend using a 3rd party ecommerce solution.? One I’ve used in the past is OSCommerce.? You need to have a little technical skill to get it up and running, but it’s mostly about configuring it to your preferences.? This is the fastest route for getting your site up and running.

4. Add your Products:

For this article, I assume you already have an inventory or source of wholesale products that you’re planning to sell.? If you built your website yourself, this is the part where you code all of your products in.? However, if you used OSCommerce, you simply need to fill in the details about your products and the software takes care of the layout.? As far as maintenance goes, the 3rd party solution will save you a ton of time down the road.

5. Set Up Your Payment System:

If you’re selling products online, you’ll want to accept credit cards.? When customers are at your site, you want to have as few barriers as possible between your potential customer and a sale.? Two cheap and easy ways to get started are PayPal and Google Checkout.? Both are free to sign up, and only take a portion of each transaction.? I believe both are still below 3%.? If you don’t want to deal with contracts and monthly fees, these are your best choices.? If you want to get that percentage down, you could sign up for a merchant account and process the credit cards yourself.? Usually, merchant accounts come with very strict contracts and high monthly fees or minimums.? Unless you’re doing a massive amount of business, PayPal or Google Checkout are the way to go.

Once everything is set up and working properly, all you have to do next is get people to your website.? You’ll want to use a mix of search engine optimization, pay-per-click advertising, and other advertising tools, but we’ll save that for another time.? For now, just get on Ebay or get your website up and running.? I hope this helps you get started in the resale business.? If you have any questions or comments, please use the comment system to let us know.

What About Rack Jobbing?

Robert at WholesaleU.com has a great post about a form of reselling that I didn’t think was this widespread.? It’s called rack jobbing, and it might be something for you to look into.? And, I couldn’t stop myself from reading it as jack robbing.? Why would I want to be a jack robber???? There! Now you’ll do it too!? Enjoy!? 🙂

Basically, rack jobbing is a relationship between a you and a retailer where you display your goods in their retail location.? The retailer only pays for products sold, and you each benefit with a little profit from each sale.

The only point I disagree with is that he says, “There is no reason for a store owner or manager to turn you down when you offer to place merchandise free of charge. There is no risk involved for him, therefore it is not hard to get you initial accounts setup.”? The next sentence warns that you’ll have to tell the retailer they’re responsible for stolen items.? It’s not the most terrible thing in the world, but it is more merchandise they have to keep from being stolen.? Depending on where you’re placing your products, they might not be used to watching out for thieves.? (ie. hair salon or other service business)? Most businesses should accept your proposition of being a rack jobber, but be prepared to put them at ease over this point.? Also, I want to mention that this policy is very important for you to stick to.? If you don’t hold the retailer responsible for stolen items, they could fudge the sales numbers and report them as stolen, thus shifting profit from your pocket to theirs.

In addition to Robert’s ideas for getting started, here are a few of my own:

  • Sunglasses at hair or nail salons
  • Car accessories at an auto body (tire gauges, air fresheners, etc…)

It was a very interesting article that I hope inspires a few readers to give it a try.? If you do, let us know how it goes.

If you’re looking for some great products to sell as a “rack jobber”, here are a few good sources:
Salehoo.com – Wholesale Supplier Listings and Product Research
Liquidation.com – Wholesale Auctions (Individual pieces to truckloads)
DOBA.com – Drop Shipping Source

Wholesale LCD TV Prices Falling

A warning to anyone preparing to get into the wholesale TV business. The New York Times has an article stating that wholesale TV prices are getting ready for a big drop. Companies have excess inventory and need to make room for new models.

What does this mean for you?

Basically, be very careful if you’re getting ready to buy a lot of LCD TVs. You might get a great price that will turn out to be very high by the time you’re ready to resell them.

They’re also reporting a lower-than-expected demand for LCD TVs. That means, if you have a bunch of TVs that you just bought at too-high-a-price, you’ll probably have trouble moving them. 1. You’ll have to price them higher than your competition because you didn’t wait for the price drop. And 2. Nobody’s buying them anyway. (Not “nobody” but you get the picture. High prices and low demand generally doesn’t work out in the wholesaler’s favor.)

What is Wholesale?

If you’re reading this blog, you may already have a good understanding of what the word “wholesale” means.? However, it seems that more and more people are losing sight of what wholesale really is.

According to the United Nations Statistics Division: “Wholesale is the resale (sale without transformation) of new and used goods to retailers, business-to-business trade, such as to industrial, commercial, institutional or professional users, or resale to other wholesalers, or involves acting as an agent or broker in buying goods for, or selling goods to, such persons or companies.”

Basically, “wholesale” simply means someone buys a product, and without doing anything to the product, sells it to someone else.

Many consumers want to buy products at wholesale prices, but don’t want to bother buying a palette of the product they want.? When I was running SellSunglasses.com, I had a minimum order of 5 dozen pairs.? Regardless of this policy, I would frequently get requests for one dozen or even one pair!? Whether I caved depended on the tone of the request.? Now that I have this wholesale blog, I can explain why the policy existed.

  1. There just wasn’t that much profit in selling one pair or even one dozen pairs of sunglasses.? I offered free shipping, so most of my profit was eaten up by that.? Add in the time to handle the transaction, and it just wasn’t a winning proposition for me.
  2. It’s the wholesale community’s responsibility to not compete with the retail community.? If I sell a real customer 10 dozen pairs of sunglasses, which they hope to sell for $20/pair, how would it look if I started stealing his customers by selling them 12 pairs for $20?

When I started in wholesale, I would tell a potential supplier that I couldn’t buy “a lot” of their product now, but once business picked up, I’d be able to buy “a lot” more.? The reason “a lot” is in quotations is that it’s entirely relative to whomever is saying it.? To me at that time, 100 dozen was “a lot”.? Unfortunately, it wasn’t a lot (yeah, enough with the quotes already), to the suppliers.? In order for me to get wholesale prices, I was going to have to prove that I was buying on a “wholesale” level.? I got a small discount, which was enough to get me started.? As my orders grew, my price went down.? I was moving from retail prices to more “wholesale prices”.

I suppose this blog post can be taken as a warning of what to expect when you’re getting started.? You can’t just call a wholesaler out of the blue and expect to get their rock-bottom prices, unless you’re willing to plop down a stack of cash for a boatload of merchandise.? You’ll need to prove that you can move a substantial amount of product before they’ll consider you a genuine customer.? Substantial is another one of those relative words.? You’ll need to figure out what that means to you as well as to your supplier.

Here are your takeaways:

  • Wholesale is simply the buying and selling of goods.
  • When buying a small quantity of products, don’t expect “wholesale prices”.
  • If you want wholesale prices, be prepared to spend “a lot” to achieve the desired discount.

Good luck, and now if you have a customer ask what your wholesale price is for one item, you can roll your eyes and smile.? 🙂

Highest Wholesale Prices in 27 Years

According to CNN Money, “The Labor Department reports that its Producer Price Index increased by 1.2% in July and by 9.8% in the past year.”? The annual Producer Price Index for finished goods rose almost 10 percent in the 12 months that ended in July.

How are the concerns about inflation and recession affecting your decisions to make money online?? Are you more motivated to build a second income, or does the fear have you tightening your pocketbook too much to invest in such endeavors?

In my opinion, we need to continue pushing ahead.? The economy will rise and fall, but at a very micro level, we each control our own finances.? Sure, a bad economy might make it difficult to get financing or reduce the amount of discretionary income you have to “gamble” with.? If you’re looking for excuses, there are plenty.? However, if you want to succeed, YOU need to take the steps yourself.? Now is not the time to cut back on advertising.? If you have an advertising system that’s providing decent returns, Google AdWords for example, you need to stay at your current level or INCREASE your ad spend.? If you’re getting a positive ROI on your advertising, more money out means more money back to you.

Now don’t be afraid.? The economy, especially the media’s depiction of the economy, can be scary, but if you want to be successful, you need to remember one thing.? The economy works on averages.? The truly successful people in this world aren’t hurting like the average people are.

Review of WholesaleCentral.com

WholesaleCentral.com is basically a directory of wholesale suppliers and products. You are also able to use their “Wholesale Power Search” feature to search the site for specific wholesale products. For a fee, you can list your items in their directory, currently $299 for 6 months. Overall, this is a good place to start if you’re trying to find your place in the wholesale market. Also, if you’ve ever searched for the term “wholesale” you’ve probably seen their site before.

When I started selling wholesale merchandise, WholesaleCentral was a great resource for me. The directory is clearly laid out, and the Wholesale Power Search actually returns mostly relevant results. It was good for researching potential products to sell. You can easily zip through and compare several wholesale sources before deciding who has the best price and terms.

Once you have a supplier, be it from WholesaleCentral or another source, you probably want to start selling those items to make some money. Once you’re ready to go, you can sign up to sell your items on their site. If you have an acceptable profit margin, and can actually make a few sales per month, the $299 fee really isn’t that bad. Over 6 months, it’s only $50/mo. If you’re not making $50 per month in sales, you need to rethink your offering, or ramp up your marketing and advertising.

This isn’t a paid ad of any kind. It’s an honest review of WholesaleCentral.com. When I used their services in the past, I truly got results. The additional sales I received because of my listing with them paid for the fee many times over. I encourage you to do your own due diligence, but SellWholesale.com officially endorses WholesaleCentral.com.