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Can a Wholesaler Sell Directly to the Public?

Jul 6, 2020

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When I was first sourcing products for my buying and selling business I heard there were some requirements to buy from wholesalers. So, I did some research into it and put together this helpful article to explain the answer.

So, can a wholesaler sell directly to the public? A wholesaler doesn’t sell directly to the public. They have requirements where you must be a registered business to buy products from them wholesale. They also have evaluation criteria for getting special wholesale pricing.

There are, however, wholesalers which can be used to get cheap items to resell that essentially sell to the public. So, below I will list them, as well, as some useful tips about working with wholesalers.

Can anyone buy from wholesalers?

There are no legal limitations on wholesalers selling to the public. Wholesalers, though, make their money by selling in bulk.

They also allocate their resources differently. Wholesalers don’t spend as much time on customer service.

So if they had to service the general public they wouldn’t have anyone to do it. They typically have a large warehouse, where it is difficult for the public to visit on a regular basis safely.

Therefore, they only deal with bulk orders. As a result, you must apply to buy wholesale from them.

Wholesalers operate on a different part of the supply chain. They buy from manufacturers. Retailers buy directly from wholesalers, but they generally have an established business and are simply adding a new product to their product line.

This means that their entire business is not dependent on the wholesaler. This is why wholesalers get retailers to apply to work with them, because they would like to service clients who will be with them for a long time.

During the application process they can also work with the retailer to source even better products for them.

Online wholesalers you can use as an individual

There are many wholesalers you can use as an individual without having to meet any minimum criteria. These are large online marketplaces where the cost of production is very low. The top websites are Alibaba.com, Chinabrand.com, and DHgate.com.

There are others but you should be able to find what you are looking for on these. The reason is because their products are produced in China, where the cost of labour is very cheap.

This means they can produce quality items at a big discount to what you can get elsewhere. They also work at large scale because of how many people use their websites.

Are distributors and wholesalers the same?

A wholesaler and a distributor both sell to retailers. However, they differ in the quantities they sell. Wholesalers typically sell in bulk and so work with larger retailers.

Distributors sell single items and smaller orders. Knowing which one you should use therefore, depends on how much stock you are going to acquire.

Newer retailers tend to go with distributors, whereas established retailers go with wholesalers. It isn’t however a black and white definition but business will typically identify as one or the other.

Can a normal person buy wholesale?

A normal person cannot buy wholesale. The quantities are too large, and the operation can be complex. Because orders are usually many thousands of dollars or more a week, the wholesaler will set up an account for them, to make ordering easier. Wholesalers will often deliver once a week or more.

Having too many customers for a wholesaler is time consuming, and as they old saying goes money is time. So, wholesalers have to choose their customers wisely and they make the most money by selling to customers who purchase a lot of products regularly.

A normal person is better suited to go to a distributor in most cases, or to use an online marketplace like Alibaba.com to source wholesale priced items.

How do I buy from a wholesaler?

To buy from a wholesaler you should have a registered business, a website, and some business bank accounts.

Registering your business will be unique to where you are located. The website can be a simple brochure style website. Doing these makes you come across as a professional, and differentiates you from a normal person.

You should then contact them and enquire about how to begin getting some products. You can apply to as many as you like and in any category. I have heard of people registering for the wholesale fruit and vegetable distribution factory because they have a large family that eats many fruits and vegetables a week.

Why do wholesalers not sell to the public?

Wholesalers make money due to an economic theory called economies of scale. It means that the more products they sell the more money they make.

This is due to the size of their margins. The margin is how much they make by selling each product. Wholesalers only make a small percentage markup per item, but sell a lot of items. Retailers on the other hand sell at a higher markup, but sell less items.

Therefore, wholesalers won’t make enough money if they sell to the public. This is because they would have to spend more money on customer service and sales to sell to them.

But, for each individual customer the total money spent is very low.

Wholesalers prefer to have large customers who order more than $500 to $1000 a time, and usually regularly like weekly or monthly.

A good example is a pizza Store like Dominoes. Dominoes has a wholesale supplier who delivers their pizza bases, sauces, toppings, garlic bread, every week on a truck.

A person who just wants one bottle of tomato sauce would not go to the wholesalers factory where they keep all the food. They would go to a supermarket which is a retailer. The pizza store would get tomato sauce at a discounted rate from their wholesaler than what you can get in a supermarket.

This is often how it can be confusing when you see how much restaurants such as Subway charge. If you were to purchase the items for a subway sandwich individually they would cost roughly the same as what subway charges.

This is because Subway gets a bulk discount for the food that they buy because they buy so much of it. When someone buys in bulk they are fulfilling what the wholesalers want which is bulk orders.

How do wholesalers get paid?

Wholesalers get paid by their clients that they sell to. Most wholesalers have ongoing clients that continue to buy consumable goods from them. They, therefore, get invoiced by the wholesaler when the wholesaler delivers the goods. Payment is made via credit card, cash, or a bank transfer.

If you are interested in selling your items on an online marketplace the website you are on now is an online marketplace, where we offer free listings. You should definitely create an account and see what we have to offer.

To do this go to the register an account page which can be accessed by clicking here.

Conclusion

Wholesalers do not sell directly to the public. This is because wholesalers make money by selling a large volume of orders. Everyday shoppers do not buy in large enough quantities for wholesalers to make money by selling to the public.

There are other places where you can get wholesale like prices such as online marketplaces. These are profitable because of the large amount of users who use their website. This makes it cost effective for vendors to list their items at wholesale prices.