When you are first starting out in the auction business, dealing with the world of wholesalers can be somewhat confusing and overwhelming. New Zealand's online auction expert Simon Slade from the SaleHoo directory shares some lesser-known facts about the wholesale buisness with Top Auction News readers:

1. Wholesalers usually don't advertise their best prices out in the open.



"It's nowhere near as simple as a Google search," says Slade. "Wholesalers are going to want you to sign up with them, first, before they show you their prices. That way, they know you are a serious buyer and are less likely to waste their time. After you have signed up for your own account, you'll get assigned a sales rep and then you can start bargaining."




2. You shouldn't have to pay fees to order from a wholesaler.



"So, yes, you'll probably have to sign up and fill out a few forms," says Slade, "but you should never need to pay any kind of fee to get established with a wholesaler. If they request a joining fee, then it's probably not really a wholesaler - it's probably some intermediary posing as a wholesaler. Someone who is charging a fee in order to make a quick buck."



But there are occasional exceptions with drop shippers; sometimes drop shippers will charge a small fee to set up the account. But wholesalers usually don't!




3. eBay is prices are typically about the same as wholesale - or even lower.



One of the things that suprises new sellers is how low the prices on eBay can go. They frequently go into business thinking that wholesale is around 75% lower than wholesale prices, but they are surprised to find that eBay rates are pretty much exactly the same. In some situations, they are even lower than wholesale. Therefore, if a wholesaler's price is competitive with eBay that doesn't mean the wholesaler is expensive - that's just how things are. In this case, you should look for liquidation deals... or find a different product to sell on eBay.



4. Wholesalers lose money when they sell to you in small lots.



The money to be made in the wholesale business is from volume sales. That's why real wholesalers are notoriously reluctant to fill smaller orders from novice eBay sellers. If you're going to be ordering a small number of units at a time to test out a new item, it might be better to go with a drop shipper.



5. Drop shipping is a significant risk for the wholesaler.



Drop shipping means that it's the wholesaler's responsibility to stock and carry all the inventory - and they have to take a risk. "That's why drop shipping is a bit more expensive than buying in bulk. IT's important to understand this to set a realistic profit margin goals,” Slade says. "Drop shipping is a great way to get started. You can start selling online without investing in large amounts of inventory and keeping it yourself. But with the reduced risk comes a reduced prospect for reward."

Labels: wholesale dropshipping