Any seller serious about creating a long-lasting profitable business will realize the importance of finding a good wholesale source.

Unfortunately, it isn't the super-quick task most people would like it to be. Wholesalers aren't exactly squabbling over sellers; indeed, most don't make any effort at all to attract small to medium size businesses. Why? Because they are doing just fine selling to large retail stores with multi-million dollar orders.

So how does anyone find a good wholesaler then? The key is to do a lot of research. Begin with keyword searches in search engines using 'wholesale' in front of or after the name of the product you are looking for. Remember that there is usually more than one way of referring to a product. While you may be searching for 'throws', the wholesaler may be listing them as 'blankets', 'covers', and 'home decor blankets'. Or they may even refer to them by the name of the fabric they are made out of.

Ebay can provide some fabulous wholesale buys also. In fact, there is an entire category dedicated solely to wholesale lots! Just search for the product you are looking for with the keyword 'wholesale' or 'lot' in the search string.

If you still can't find what you are looking for, then try an online wholesale directory. Directories take a lot of the leg work out of finding suppliers. Good directories will thoroughly research all the contacts they recommend, removing the risk that you'll end up dealing with a fraudster. While directories don't automatically point you to the best supplier with the lowest prices for your item, it will give you a starting point.

Another way of finding wholesale suppliers is by contacting the manufacturer directly for the product you are interested in selling and asking them who their wholesale distributors are. This is a slightly scary option (particularly if the manufacturer is in a non-English speaking country!), but it can be extremely beneficial in the long term.

If you live in a big city, tradeshows are possibly one of the best ways to make wholesale contacts. A trade show is where related industries gather to showcase their products to potential buyers. Trade shows are not open to the general public, only to other businesses. Not only can you sample the quality of the product at a trade show, you can also talk directly to the manufacturer or product creator! Just make sure you come prepared and don't waste their time with questions you could have found out by reading the brochure!

Finally, it's important to realize that most wholesalers adjust the price per unit according to the order of the quantity. For example, throws might be $10/unit for an order of 15-30, $9/unit for 30-50, and so on. This means that as a small business, you might not be able to get the prices you were hoping for at first. It also explains why eBay powersellers are sometimes able to retail items for prices below your wholesale price. Once again, this emphasizes the importance of establishing a niche where there is less competition.

What is drop shipping?

Drop shipping is when the product distributor takes care of all the shipping for you. Rather than ordering stock in bulk, the stock remains with the distributor. Then, when you make a sale, you send an email to the distributor and they pack up the item and send it straight to the customer with your company label on the box.

Drop shipping is a very popular option with sellers because it takes a lot of the grunt work out of selling on eBay. However, there are some major downsides to drop shipping - especially for new sellers.

Here's a list of the pros and cons of drop shipping so that you can make the right decision for your business.
Drop shipping Pros
No storage room required
You don't have to fill up your living room with stock and packing materials! This is particularly useful if you are selling large items such as kit-sets, furniture, sporting goods, and so on.
No shipping costs getting stock delivered from the distributor
Drop shipping means you don't have to pay a carrier to bring stock from the distributor to your own storage area, which can mean big savings in the long term.
Spend more time on other areas of your business
You don't have to organize the packing and postage system, nor do you have to drive to the post shop each day to post your packages. This gives you a significant increase in time to spend on other tasks such as marketing and communicating with customers.
No packaging required
You save money by not having to order and store packaging materials.
Drop shipping Cons
Can be Costly
You have to pay for the cost of the labor and materials involved in drop shipping. Generally this is between $2 and $5 per item. Many new sellers find that the additional costs of drop shipping greatly reduce their profit margins and sometimes nullify the whole operation. This is the main reason why drop shipping is not a viable option for some sellers.
You are still responsible for any shipping problems
So the item arrived damaged? Was there a shipping delay? You'll get the flak for anything that goes wrong with the shipping even though it is technically out of your control.
Hard to find a distributor who will do it and do it well
Many distributors will not drop ship because of the extra paperwork involved. Then there is the matter of checking up on quality standards to make sure your items are being packed correctly.
Low stock levels may cause unhappy customers
Your drop shipper won't necessarily tell you when they are running low on stock. If they run out and have to do a back order, you may end up spending a great deal of time placating a bunch of unhappy and impatient customers.

Drop shipping is a very appealing prospect for many sellers; however it is not always a realistic one. Despite the hassle, 'doing it yourself' can often be a more sensible option financially, especially for new businesses.

While many fantastic wholesale sources can be found online, there are also a huge number of sites developed specifically to scam sellers looking for a good deal.

So how do you tell whether you are dealing with a real wholesale supplier?
First of all:

A supplier may be selling fakes of big name brands but this doesn't necessarily mean he is out to scam you. There are many suppliers in China and other countries selling fakes, but as long as you realize what you are buying, that is not a problem in itself.
The supplier may say they can only accept Western union and wire transfers as payment. These are insecure payment methods, but for Chinese suppliers, these are often the only two options available as credit cards (and therefore Paypal) are almost impossible to get. You should always take the precaution of ordering only a small amount when dealing with a supplier who only takes Western Union and wire transfer for the first time, but many legitimate manufacturers and wholesalers use these methods out of necessity rather than because they are illegitimate.
The Warning Signs

Warning bells should start ringing if you come across any of the following:
Fake address - either it doesn't exist or it exists in a poor or residential area.
No contact details listed on the website.
When you call, the telephone is answered by an individual who does not identify himself on picking up the phone.
You are not asked for a business or tax number.
The company suddenly stop replying to your emails.
Parts of the text or images on their site are copies from other websites.
When you place an order, the company claims they do not have any stock, but want to receive the money before ordering any in.
Your contact becomes shifty when you ask for a product sample
Steps to Protecting Yourself

To find out whether you are dealing with a scammer, try these tips:
Copy and paste some text into Google. If it is copied from another site, you'll soon discover it in the search results.
Check that the website gives a full business name and a registration number.
Ring them to verify the phone number given is good, but don't accept a mobile phone number as enough, all companies should have a land line number.
As for a photograph of the stock with the company logo in the background. Go to www.coolwhois.com and search for the name of the website. A legitimate company will have been operating for over a year (at least!) and their expiration date will be for several years time. Most legitimate companies reserve their domain names for 3-5 years or more at a time.
Use secure payment methods such as Escrow, Cod and Paypal Verified whenever possible.
Ask other sellers what their experiences have been with the company on forums.

I've got my idea - now where do I go?

Not sure where to turn to find your stock? The best idea is to find a couple of supply sources for your items so that if one dries up during a busy period, you won't be left high and dry.
1. Garage Sales

Garage sales can be a great opportunity to pick up potentially valuable items selling for pennies. However, they do require a regular time commitment and a lot of patience! You'll quite likely travel around 5-8 sales before you find anything suitable. Going around garage sales requires planning and rising early. The best idea is to look through the morning papers as soon as they arrive. Plan your route to make most efficient use of your time so that you are not doubling back. Make a list of items you would like to find and the maximum amount you would pay to make a profit. And finally, don't forget to take cash! Take small bills and some change as most garage sale owners only have a small amount on hand. It's a waste of everyone's time if you have to race down to the ATM machine. Garage sales can be useful sources, but they rely on luck and have a high time cost per item. Thus, serious sellers don't rely on garage sales as their sole provider.
2. Liquidation sales

Liquidation sales are a fantastic way of finding brand-name items at enormous discounts. Check your newspapers and look for sales in your area. Before buying from a liquidator check to see why the goods are being sold. Most of the time liquidation sales take place for legitimate reasons such as company bankruptcy, store relocation and so on. However, it always pays to check as you don't want to end up with a pile of stock you can't shift. Another thing - don't bother with liquidation stock that is outside the scope of your business. There is no point buying liquidation bicycle equipment just because it's cheap when you only sell jewelry.

Alternatively, you can find liquidation sites on the Internet - one such site is http://www.liquidation.com. These sites make it extremely easy to buy liquidation, particularly if you live in an outlying area. One thing - just make sure that the possibility of damaged stock and used or returned items included in the lots is small or non-existent.

Liquidation sales are a great way to supplement your stock, but they can't be relied upon to restock the shelves.
3. Estate sales

Estate sales can be a goldmine for anyone selling jewelry, vintage clothing, books, furniture and so on. Once again, you need to have an idea of how much you can afford to spend before you go. Don't forget to buy items your customers would like, rather simply getting caught up in your own enthusiasm for what is for sale. Note that estate sales run by an agent are unlikely to garner the same bargains as one run by the family.
4. Clearance stores

At certain times of the year, most major stores will have a stock clear-out sale. Some of these sales give you the opportunity to buy goods 50% or more below the regular retail value. This can be a fantastic opportunity to find items to sell - or replenish your stocks. Good clearance sales can be equal to or even below a good wholesale price. Don't forget to overlook small hobby shops in your area with clearance sales either. If you know the store is going to have clearance sales regularly, then this can be one method of getting stock.
5. Wholesalers

Wholesalers are the most reliable method of sourcing goods. While the initial process can be time consuming at first, it is effort that pays off. When you have found a wholesale, you now have certainty of when you are going to receive stock and how much you will have to pay for it. The best way to find wholesalers is to use a directory. Directories remove the risk of dealing with illegitimate wholesalers and give you some peace of mind when dealing with wholesalers and manufacturers from China. Wholesalers should be the mainstay behind your product sourcing.

1. Thorough market research is the foundation for success

Meticulous market research doubles your chances of making a tidy profit from the wholesale goods you buy. Start off with a list of 5-10 different ideas. Then check completed listings searches on eBay to see what the item generally sells for and the sell-through rate for each one. Use Yahoo's free keyword tool http://inventory.overture.com to find out how many people are searching Yahoo for your product per month. You can double this figure for Google. Add the numbers together. If there are ten thousand or more searches per month for an item, this indicates a healthy market.
2. Calculate the REAL cost of your item

One big reason why people fail at the wholesale game is that they don't do the numbers. In other words, they don't treat wholesale like a real business. To accurately discover your true profit potential on an item, you need to add the shipping cost and insurance, eBay fees (or equivalent for other advertising), Paypal and/or credit card fees (these can be a real profit killer), packaging costs and labor involved packaging, and any storage costs to the cost of your item.
3. Verify ALL suppliers found on the Internet

Getting caught out by scammers is a common stumbling block for people new to wholesale. If you are searching for suppliers off your own bat (rather than using a wholesale directory like SaleHoo), it is CRITICAL to check authenticity before making a purchase.

Always take the time to:
Check that the website gives a full business name and a registration number.
Check for a legitimate contact telephone number - this will involve ringing the number. Do not accept a mobile phone number alone. All real companies should have a land line number.
Go to http://www.whois.sc/ and search for the name of the website. A legitimate company will have a domain expiration date in several years time. Most legitimate companies reserve their domain names for 3-5 years or more at a time.
AVOID suppliers who won't agree to use secure payment methods such as Escrow.com, Credit Card and Paypal Verified.
Still uncertain? Ask other sellers what their experiences have been with the company you are interested in on eBay forums.
4. Chinese suppliers give the competitive edge

Chinese suppliers are an essential source for anyone wishing to make money selling online. Manufacturing costs are currently extremely low in China, thus it is the secret to gaining a competitive edge. Dealing with China does have risks, but these can be alleviated if you place a small order first, use secure payment methods, get shipping insurance for 110% of the cost of the items, and use suppliers with a good reputation.
5. A common stumbling block for liquidation and closeout

Always obtain the reasons for liquidation and closeout sales before you buy. Liquidation and Closeout sales can be a fantastic source for cheap products, but you usually have to buy by the pallet load and these can sometimes include broken or returned goods that aren't in saleable condition. To be safe, ask specifically whether broken items and returns are included before you buy.
6. Negotiate on shipping and save

Shipping economically is critical to importing success. Profits can easily get swamped in shipping costs, so take time to get a good deal on shipping. If possible, negotiate CIF (Cost, Insurance & Freight) or DDP (Delivery, duty paid) shipping terms with your supplier as this takes much of the risk - not to mention organization - off your shoulders. FOB (Freight on Board) is the most common shipping term, but don't be afraid to negotiate for better.
7. Drop shipping - can you really afford it?

Drop shipping sounds great in theory - someone taking care of packaging, wrapping and postage - but it can be difficult to profit from this method. Think about it, drop shipping can add another $2-10 to your costs - sometimes even 10% of the cost of the item. By the time you add in eBay fees and any other costs, you may find it is not worth it.
8. Warehouse storage checklist

Asset management is the most important consideration when locating warehousing to store your items. Believe it or not, items can go missing while in storage, causing massive disruption for you. When comparing warehouses, ask questions specifically on how you will authorize the release of stock (by phone or fax?), what will happen if you need to cancel an order, frequency of damage claims, dust management, and whether there is an area you can use to photograph items.
9. Powerseller wealth

It's a fact - eBay powersellers are able to command higher prices for their items than ordinary eBay sellers. To get the best profits on your wholesale items, you need to aim to get and maintain powerseller status.
10. Growth with a website and eBay store

The way to increase profits from wholesale is to build your own website and/or open an eBay store. This allows you to cross sell items plus it also makes it easier for people to find what they are looking for. For example, if you sell shoes, then customers can easily navigate to browse all black shoes in size 9 and so on. Always include a sentence at the bottom of your descriptions encouraging visitors to check out your other listings - most people will.

If you are looking for genuine and trusted wholesale suppliers then look no further than SaleHoo! SaleHoo's directory contains over 4000 drop ship, wholesale and closeout suppliers that are independently reviewed and rated by eBay Powersellers and Industry experts. SaleHoo also purchases off them and reviews each supplier in depth afterwards.