What Is a Wholesale Contract?

Wholesaling involves trading merchandise in volumes to retailers or other buyers for a lesser cost. The buyer then repackages and resells the products individually or by packs at an increased price. Unlike distributors, wholesalers can sell many competing products. They may specialize in one product type or may also offer different goods. Typically, wholesalers buy their goods from manufacturers and focus on selling and delivering goods to their buyers. When it comes to ordering and pricing, a sales agreement or a wholesale purchase agreement addresses these factors. Therefore, a sale or purchase agreement is a type of wholesale contract that explicitly concerns the trading of goods. Additionally, wholesaling may also involve real estate. For example, a wholesaler can arrange with the seller about marketing a property to potential buyers under a wholesale assignment contract. However, our focus in this article will be the former.

According to Statista, in 2018, the total sales of grocery products in the United States reached about $966.4 billion.

That is a significant increase if we look at the statistics ten years back, where the total sales only amounted to $692.2 billion.

In addition to that, the total sales of durable goods in the U.S. in 2018 amounted to $3.8 trillion.

Tips on Finding a Wholesaler for Your Business

As mentioned, a wholesaler or a wholesale distributor is an entity that purchases goods from manufacturers and trades them usually to retail businesses. A wholesaler distributor doesn’t function as a store. They are mainly responsible for supplying other companies with the products that they resell to end customers. With that said, here are some tips on finding a wholesaler to provide for the needs of your business.

Look for the right wholesale supplier. If you own a small business, you can collaborate with one or more suppliers. However, you’ll need to find the right partner for your business. The distributor you find should: (1) supply you with the inventory your shop needs, (2) offer prices that your business can afford, (3) someone you can trust and work with, and (4) serves your specific region. Note that before you look for a wholesaling company, you must first determine the product you want to sell. After determining the good/s you wish to sell, you can start looking for a wholesale distributor to provide your shop’s needs.Know the different distribution channels. There are several ways an item can move from the manufacturer to the retailer. Every industry has a diverse supply chain structure. A manufacturer can be a wholesaler. For example, boutique shops usually purchase directly from small manufacturers. Also, An exclusive distributor or importer can operate as a wholesaler. For example, a company may have the only right to bring goods to a particular country. They may sell their imports directly to retail businesses or small wholesaler-distributors.Moreover, a regional distributor can also be a wholesaler, selling merchandise to wholesalers and small businesses locally. Furthermore, there are also jobbers, and they are people who do deliveries daily to brick-and-mortar and grocery stores. Again, every industry has its type of distribution, and it can vary depending on the item, area, or country. Initially, you will have to buy products from small wholesale businesses at a higher cost. As your business grows, you can avail products from larger wholesalers at lower prices.You can try connecting with the manufacturer. Going through wholesalers can lower down your profit. So, you can try connecting with the manufacturer of goods first.  If you plan to sell branded products, ask for supplies directly from the manufacturer. They might agree to sell you their items depending on what they require. If they find that your business is too small or if they exclusively sell through set distribution channels, you can inquire for the names of reputable wholesale distributors you can communicate with. Remember that the lesser people you deal with, the smaller your expenses will be. Before you deal with the manufacturer under a contract, you can request a product sample. By doing that, you will have the chance to check the product’s quality.Contact your list of suppliers. Start communicating the names of the distributors you listed, and know their order requirements, their wholesale pricing, and the specific area they supply. You can contact them initially through email, and then you can follow up through phone calls if you have more questions or have decided to partner with them. Be honest and straightforward in your conversations with the wholesalers you communicate with. Let them know that you are also considering the offers of other distributors. By doing that, you will probably get reasonable prices.Do some detailed researching. If you search online, search about the specifics. Search for the specific names of the products, their model numbers as well as brand names. If you find a distributor, but you don’t see any contact information, you can search through WHOIS and find what you need. The more suppliers you explore, the more you have a competitive advantage.Consider e-commerce. If you are new to small business sales, then consider selling through electronic commerce. You can make a deal with eBay and sell products to retail consumers. Some businesses sell directly to customers on eBay while also selling products to local retail shops at the same time.Check business-to-business marketplaces. There are several major B2B platforms online. On these platforms, you can purchase products in bulk at lower prices. One example is Alibaba.com, and it is a vast B2B marketplace for manufacturers and wholesalers. Other examples of B2B platforms include Global Sources and Buyer Zone. Search for B2B markets that provide services to your specific region or country. There are specific B2B marketplaces per industry that can distribute for a country or retailers globally.Join group networks. You can gain information from established businesses in your specific industry. However, other retail companies might hesitate to share information with their competitors. So, invest some time in building connections with other businesses. Join online forums. They can be a source of useful information, and you’ll likely see suggestions from experienced business people. Also, you can create a LinkedIn account, subscribe to business newsletters, and join networking groups. By doing those things, you will be able to establish connections with other entrepreneurs.Subscribe to trade publications. You can find useful information in trade magazines regarding relationships and businesses in your particular industry. Most advertisers found in magazines are manufacturers or wholesalers looking for retailers. Note that one magazine can give you a list of manufacturers and wholesalers. Moreover, you can also subscribe to blogs and newsletters online. Subscribing to publications is one way to update yourself about the trends of your industry.Participate in trade shows. Participating in trade shows is one effective way to grow a small business. These events serve to connect retailers to manufacturers and distributors. You can meet a lot of manufacturers and wholesalers in one day. You can check the Trade Show News Network online to search for upcoming trade shows happening in your state.It’s okay to make mistakes. Finding the right wholesaler for your business can be challenging. Remember that what you need as a starter is a merchandise that you can sell for a profit. Initially, it may not be the best price, but as your business expands, you can negotiate the price with your wholesaler.

How To Set Up a Wholesale Business

Setting up a wholesale company is a great option if you don’t want to deal directly with customers. With that said, here are the steps to follow to set up a wholesale business.

Step 1: Identify Your Market

You must know your target market through research. Look for store owners, dealers, and customers who are looking for the products that you sell. Also, as you begin to establish a brand, keep an eye on your competitors. Be eager to know the products they advertise, their wholesale prices, and their kind of service.

Step 2: Look for a Place for Your Business to Operate

A place is essential for your business to function. It can be challenging to find a location, and spaces in cities are usually expensive. So, it may be best to separate your warehouse and your office. Also, hire honest and efficient staff members under an employment contract to keep your inventory safe.

Step 3: Connect with Suppliers

Connect with suppliers who are willing to commission you to be the wholesaler of their goods. However, you should think carefully before signing a wholesaling contract since most companies will demand you to meet a specific sales target. In some instances, you need to communicate with a manufacturer’s distributors if they cannot supply their products straight to you.

Step 4: Understand You Manufacturer’s Return Policies

Not all manufacturers will have the same return policies. So, understand your manufacturer’s return policies. The policies may include statements concerning how the supplier will take care of the products returned to them because of defects or other reasons. Also, you must check their service policies concerning after-sales. If a manufacturer doesn’t have these policies, it’s better not to continue your deal with them. Your business may end up having too much inventory that you cannot sell.

Step 5: Obtain and Make Use of an Inventory Software

Buy an inventory software application that will help track the flow of your products. Search for good software programs online or get ideas from other business people who use the same. It will also help you give delivery schedules and proper quotes to your buyers. In that way, you will be efficiently moving your products.

Step 6: Use a Contract when You have an Arrangement

When having deals that concern large sums of money, always use a contract. Be strict when it comes to payment and detail the terms in the agreement. Your contract should address the questions: When will you be paid? What are the conditions for payment? What are the methods for payment? Etc.


What is a wholesale property contract?

A wholesale property contract is another name for a real estate wholesale contract. It is a legally binding agreement between a wholesaler and a seller. The real estate wholesalers’ job is to look for a deal, obtain the rights, and reserve the contract for a real estate investor.

Is there also wholesaling in finance?

In finance, wholesaling points to the financial aid that banks provide to property developers, corporate clients, and pension funds. In the said industry, wholesalers can be mutual fund sponsors. In this case, a management company that handles assets hires wholesalers or mutual fund sales agents to sell products.

What are the different types of wholesalers?

According to The Balance, there are three types of wholesalers: the merchant, the specialty, and the mail-order wholesalers. One good example of a merchant wholesaler is Wal-Mart. Wal-Mart sells a variety of items to its customers. A specialty wholesaler, on the other hand, focuses on selling a specific product. Lastly, a mail-order wholesaler sells products that are hard to find. You can find them online, and they will deliver the product directly to you.

Though a wholesale contract can come in different forms. Every type has the same purpose. It is to protect a business from fraud or from being taken advantage of. So, for your reference, you can check and download one of our wholesale contract templates above.