Have you made your first Internet wholesale purchase? Are you gearing up to buy from a supplier? There are a few things you must consider before making that first purchase including what will be required of you to set up a wholesale account. I will assume for the purpose of this post that you have already picked out a supplier to buy from after long and careful research.
Check the following out before placing your Internet or phone order:
Monetary requirements for initial purchase: The Company you will be buying from might require a substantial first purchase and/or have a minimum order amount, which must be reached. The reason for this is generally that wholesalers do not want to sell to consumers who are merely buying products for themselves. Most wholesale companies want to establish long-term relationships with retailers that will grow over time.
Business License: There are a few wholesale companies, which will require you to provide your business license before making a purchase. A business license can be obtained through your local city offices and the fee associated with the license will depend on the type of your business and gross yearly receipts. A business license will cost $35 - $100 on average if you are just starting out.
Resellers License: A sales tax reseller license is an often-confused subject and a lot depends on the state or county where you do business. States have different names for the same permits or licenses: Resale Permit/License, Sellers Permit, Certificate of Authority, Use and Sales Tax License/Permit Sales and Use Tax, Application to Collect/Report Tax, Transaction Privilege (Sales) Tax, Resale Certificate-all adding up to much the same thing. Generally, companies who sell wholesale want to be sure their customers are not buying for their own consumption, thus cutting out the wholesaler's true customers. So when they ask for a wholesale or resale license, it allows them to be sure they are dealing with a business that will truly resell their goods. A great resource to use to find out the exact license requirements for your City/State would be your local City offices and your Chamber of Commerce.
http://www.uschamber.com/chambers/directory/default">Find your local Chamber of Commerce.
Are terms available: Applying for credit might be advantageous if you are just starting out, as terms will offer time for repayment. The typical credit terms offered are Net 30. Net 30 is a form of trade credit wich specifies payment is expected to be received in full 30 days after the goods are delivered. Net 30 terms are often coupled with a credit for early payment; e.g. the notation "2% 10, net 30" indicates that a 2% discount is provided if payment is received within 10 days of the delivery of goods, and that full payment is expected within 30 days. Most companies will have a credit application, which will need to be filled out and faxed into the company for review. Expect to offer industry specific references, general information about your business and banking information in order to be approved.
Payment methods accepted: Investigate the various types of payment methods accepted by this potential company. Do they accept Visa, MasterCard, American Express and Discover? Can you mail a company check or money order? If paying by credit card many companies will require you to fax a copy of your current Drivers license and front/back copy of the credit card you intend to use. Some wholesale companies will require you to make payment by wire transfer. A wire transfer is a method of transferring money from one entity to another. A wire transfer can be made from one entity's bank account to the other entity's bank account. Wire transfers are expensive, if required by your wholesale company check with your local bank about the associated fee before commiting to purchase.
Other areas which I recommend reviewing before purchasing include:
Return Policies: Do the written terms spell out the return policy for defective products? Who pays for the freight? Can you get a refund or does it have to be a credit? If you have any questions about returns please ask before you purchase.
Volume Discounts: Are there volume discounts available? Sometimes you can negotiate discounts, if none currently are available.
Order Processing Time: Since the time from when your order is placed until you receive your inventory will affect how much inventory you need to keep on hand, it is important to ask lead time you need to allow between orders.