There are several steps to buy at wholesale prices for retail businesses. Typically, most retailers buy the products they sell from wholesalers and distributors. Such as a book store buys books from a books wholesaler. Wholesalers support businesses as they grow and evolve by providing industry specific merchandise. As a retail business owner, find a reliable wholesaler who sells the goods and products you need to run your business. Follow these steps on how to buy at wholesale prices for your retail business.
Apply For An EIN And Tax License
First, apply for an EIN and tax license to buy at wholesale prices for your retail business. Obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). Apply online with the correct information to immediately be issued a number. Then, you can use this number to set up bank accounts for your business and several wholesale distributors. Next, apply for a state sale tax license. Licenses depend on the state that you live in. For example, in Texas the license is called the “Texas Sales and Use Tax Permit”. Of course, search for your state’s tax or revenue department to find the website where you can apply for the license. Certainly, apply for an EIN and tax license for your retail business to buy at wholesale prices.
Determine Wholesale Needs
Next, determine your business’s retail needs before buying at wholesale prices. Buying wholesale can save money and increase profit margins. However, you first need to assess your sales history, warehousing and projected sales. Review your POS terminal to confirm that your sales can justify buying wholesale. Typically, wholesalers have a minimum purchase amount. So, identify which products are best suited for and needed in bulk. Additionally, discover if you have enough room to store your bulk purchase. Finally, analyze your projected sales to cover the cost of storage and potential loses on perishable items. Definitely determine your retail business’s wholesale needs when buying at wholesale prices.
Compare Different Wholesale Pricing
Then, compare different wholesale pricing for your retail organization. Search for more than one seller, such as manufacturers, brokers or jobbers. This way, you have multiple options when buying products and merchandise in bulk. Most manufacturers sell at a very low price. For example, you can buy protein powders in bulk for a lower price by buying from a protein powder manufacturer. They manage and own distributors that sell products in certain places. Of course, wholesalers typically buy their inventory from distributors or manufacturers to sell to retailers. Certainly, you can buy products for lower prices by wholesaling from manufacturers directly. Or, you can work with brokers or jobbers. These wholesalers focus on selling to businesses in small areas. Consider talking to their distributor for a better price. Surely, compare different wholesale prices for your retail business.
Find A Wholesale Supplier
Furthermore, you need to find a wholesale supplier to buy at bulk prices for your retail business. Most retailers are purchasing products through online wholesalers. There are online directories with thousands of manufacturers for a wide range of categories. Additionally, you can access directories with a diverse array of products, bulk-purchase suppliers and drop shippers. Find a supplier in your price range who you can easily communicate with. Discuss how you will receive your products, payment terms, or volume discounts. Separate shipping could cost extra and could affect inventory replenishment. Of course, find a reliable wholesale supplier who meets your needs.
Calculate Retail Margin
Finally, calculate the retail margin for your business when buying at wholesale prices. Set your wholesale price by multiplying the cost of goods by 2. This will confirm that your gross profit margin will be about 50% to 60% more than what you paid. Typically, apparel businesses aim for about 30% – 50% of their wholesale profit margin. However, direct-to-consumer retailers look for about a 55% to 65% margin. For example, your business sells bathing suits. If each bathing suit cost you $15, you would sell them for $30 a piece. Your retail margin per suit is $15, or 50%. Certainly calculate your retail margin when buying at wholesale prices.
There are various steps to follow when buying at wholesale prices for retail businesses. First, you need an EIN and tax license for your retail organization to buy at wholesale prices. All businesses buying wholesale, including diamond wholesalers, need an EIN. You can apply for both online. Next, determine your wholesale needs by assessing warehousing, sales history and projected sales. Then, compare different wholesale prices between manufacturers, brokers or jobbers for the best deal. Furthermore, find a wholesale supplier who you can communicate with, get a good price from, and will ship directly to you. Finally, calculate your retail margin to see how you should price your products. Surely, follow these steps when buying at wholesale prices for retail businesses.