Finding a wholesale supplier is a strategic task for a retailer. Much of a retailer’s business strategy revolves around getting the widest range of goods at the lowest prices for his customers.

2. Finding a wholesale supplier is a strategic task for a retailer. Much of
a retailer’s business strategy revolves around getting the widest
range of goods at the lowest prices for his customers. The wholesale
supplier enables this at the back end for the retailer. Small retailers
however find it difficult to locate good wholesalers. The primary
reasons are small transactions and lack of financial muscle. To add to
the complexity, there are thousands of rip off wholesalers who scam
these unsuspecting retailers out of their money. However, as always,
the fraudsters leave some clues. Here are the tell tale signs that
should signal a fake wholesaler to you:
 Too Much Advertisement:
Advertisement costs a lot of money. Wholesalers run on thin margins.
Their businesses are primarily driven by volumes. Hence, if you come
across a wholesaler who is advertising heavily over the internet and
having his website optimized, be wary of them! A genuine wholesaler
would not find it logical to spend huge sums on advertising when it is
not the best way to reach their customers. In this business, customers
find them through word of mouth publicity.

3.  Registration Charges:
Only very established wholesale suppliers can ask for upfront
registration charges. If you come across a “never heard of before”
wholesaler and they ask you to pay to get enrolled in their
scheme, be careful. In all probability it is a fraud. The best course
of action is to avoid such deals. However, if you think you are
dealing with a genuine wholesaler, conduct very careful due
diligence. If they are overseas, just drop the idea. It’s just not
worth the risk.
 Small Minimum Guarantees:
A wholesaler will stock a lot of products in the anticipation that
you will buy from them. What happens if you don’t? They go
bankrupt. It is for this reason that they contractually oblige you
to commit a minimum amount of purchases you will make each
month. If you find these numbers too small, it means the
wholesaler is bearing the risk. A wise wholesaler will never bear
so much risk. It could ruin their business overnight. Hence, it
most likely is a fraudster who is using small minimum guarantees
as a bait to lure you in. Some will even justify this with the
registration charges you have paid. In either case, hold on to your
wallet.

4.  Too Much Variety:
Wholesalers generally pick niches. A wholesaler that sells
everything under the sun is hard to find. Now, this is not a matter of
choice but of necessity. The business model requires wholesalers to
stock products in large quantities. Assuming that they would stock
1000’s of units of 100’s of products, they would have huge
inventory costs. On top of it they will require a huge warehousing
infrastructure to store it. If you are not dealing with a major
corporation, then the wholesale supplier is probably a fraud. Here,
variety is used as bait. They will most likely tell you that you have
to fulfill a minimum purchase commitment, but you have so many
products at your disposal. This gives you the confidence, that you
will easily be able to do so. It is this greed that makes retailers fall
prey to such scamsters.

5.  Deep Discounts:
True that wholesale suppliers can get you a lot of discounts but at
the same time, if the discounts sound unbelievable, please verify.
Quoting a percentage figure is not possible here, because different
products have different discount norms. However, if you find
someone who is way of the mark, be cautious. These guys often
promise you prices at which it is impossible to manufacture the
product. They will pose as offshore suppliers or agents to convince
you on the benefits of low costs there.
Selecting a wholesaler is a task which is pivotal to the success of the
retailer. It must be done only after careful due diligence since its
outcome can be long lasting. The bottom line of the company can be
positively or negatively impacted by this choice. Be sensible and be
realistic!

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