How to Start a Wholesale Distribution Business

So you want to start a wholesale distributorship. Whether you're currently a white-
collar professional, a manager worried about being downsized, or bored with your current job, this may be the right business for you. Much like the merchant traders of the 18th century, you'll be trading goods for profit. And while the romantic notion of standing on a dock in the dead of night haggling over a tea shipment may be a bit far-fetched, the modern-day wholesale distributor evolved from those hardy traders who bought and sold goods hundreds of years ago.

The Distributor's Role

As you probably know, manufacturers produce products and retailers sell them to end users. A can of motor oil, for example, is manufactured and packaged, then sold to automobile owners through retail outlets and/or repair shops. In between, however, there are a few key operators-also known as distributors-that serve to move the product from manufacturer to market. Some are retail distributors, the kind that sell directly to consumers (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.

Three types of operations can perform the functions of wholesale trade: wholesale distributors; manufacturers' sales branches and offices; and agents,. As a wholesale distributor, you will probably run an independently owned and operated firm that buys and sells products of which you have taken ownership.

Now, thus blurring the lines. However, the traditional wholesale distributor is still the one who buys "from the source" and sells to a re seller.

Getting Into the Game

Setting Up Shop."

State of the Industry

Starting Out

Operations

A wholesale distributor's initial steps when venturing into the entrepreneurial landscape include defining a customer base and locating reliable sources of product. The latter will soon become commonly known as your "vendors" or "suppliers."

Weighing It Out: Operating Costs

The Day-to-Day Routine

Who Are Your Customers?

Retail distributors: This includes the distributors who sell to those retailers that you may find impenetrable on your own. For example, if you can't "get in" at a power retailer like Wal-Mart, you may be able to sell to one of its distributors.

Exporters: These are companies that collect United States-manufactured goods and ship them overseas.

Other wholesale distributors: It's always best to buy from the source, but that isn't always possible, due to exclusive contracts and issues like one-time needs (e.g., a distributor who needs 10 hard hats for a customer who is particular about buying one brand). For this reason, wholesale distributors often find themselves selling to other distributors.

Finding a Profitable Niche

Once you have done the necessary research on your soon-to-be customers and competitors, you will have a much better idea what type of niche your new company can fill. Profitable niches in today's wholesale distribution arena include, but are certainly not limited to, reselling products that require

Some advice's

Don't overdo it when it comes to buying inventory.

Try to get a grasp on your customers' needs before you invest in inventory.

If you can get away with doing it cheaply at first (especially those with low overhead), then go for it.

Be wary of investing too much in short- life-cycle products, which you may get stuck with if they don't sell right away.

Stock up to a level where you can sell the product before you have to pay for it.