wholesale buyingWholesale buying is a critical part of selling products on eBay, your own website or any online marketplace. However, it’s also a task that stops many retailers in their tracks, because for the inexperienced retailer, wholesale buying can be risky.

To help keep you and your money safe, here is a quick-guide for safe wholesale buying.

Run a background check on suppliers

If you are like most online retailers, when you decide on a product you want to sell, you will start Googling your way to finding the right supplier who stocks the product and can sell it to you at the right price.

While Google searches can be a fantastic way to find suppliers, it can also expose you to a lot of crooks who are posing as suppliers, but who are actually scammers ready to take your money and run. Here’s what you need to do to avoid this:

Review the supplier’s contact information

Generally, the more contact information they give and the more options for contact they provide you (phone, email, physical address), the more you can trust them. If they only list an email address, consider it a sign that the supplier may not be trustworthy. If the email address is a Hotmail or Gmail address, this is another sign that the supplier is not the real deal.

Before you place an order, call, or at least email, the supplier to introduce yourself. While it’s a nice touch to speak with your supplier before you do business with them, it will also give you an opportunity to see how long they take to reply to emails and/or how courteous they are on the phone.

HOT TIP! If the supplier does list a physical address, copy and paste the address into Google Maps and check that the address actually exists. Take a look at the Street View and see if the area is a commercial one. If you see a residential home, it might be another sign that they supplier is not legitimate. I will add a caution here that many legitimate wholesalers do operate out of their home garages, so don’t write off a supplier completely if you don’t see a large warehouse!

Know when a deal is too good to be true

A common wholesale scam occurs when so-called “wholesale suppliers” advertise hot selling items like iPads, mobile phones and laptops at extremely low prices that are, quite literally, too good to be true.

While it is a nice thought you can purchase wholesale Mac laptops for $147 and resell them for $900, this simply isn’t the case. When start to learn the basics about wholesale buying, you will find that most wholesale items sell for around 5-30% less than the retail price, depending on how much you purchase.

In short, if a deal seems too good to be true, it most likely is.

Avoid fakes, replicas or counterfeits

Replicas of designer or branded items are illegal to produce and sell. Try selling these on eBay and your account will get closed down pretty fast. Try importing them in from China, where the majority are produced, and you might get a call from the local customs authority.

While it can be tempting to go down the route of selling replica items which can sell like hotcakes at good prices, doing so is dangerous and can present consequences ranging from the aforementioned eBay account closure, to fines from customs, to prosecution by the brand owner.

Forecast your potential profits before you buy

An essential part of market research is determining how much profit you will potentially make on each sale.  In order to determine whether a product is viable or not, you must calculate the cost of the individual item, the cost of shipping the items to your home or warehouse and the cost of selling the item (web hosting fees, marketplace fees, PayPal fees, etc.).

Too many retailers simply make a decision on a product based on a wholesaler’s price per unit and do not calculate to associated costs of selling an item. In doing so, you can easily miscalculate your margins and wind up losing money on each sale you make.

While there is a lot to keep in mind when you are buying wholesale items, the benefits for your business are plentiful. Just make sure you keep this quick-guide handy for next time you go looking for a supplier!

Got a question about wholesale buying? Ask me below!

About the Author: Alice is an education specialist for SaleHoo.com. SaleHoo connects over 92,000 eBay sellers and online retailers with wholesale suppliers all over the world. Their product range includes a wholesale supplier directory, market research software and eCommerce software.

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