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1. Extensive market research is the foundation for success

Thorough 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. Determine and calculate the REAL cost of your item

You must calculate the numbers or you will fail as a wholesaler. Not doing the numbers is the number one way wholesalers fail. 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. Make sure you verify ALL suppliers on the Internet

A common stumbling block for people new to wholesale is being taken advantage of by scammers. 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.

You must always take the time to:

* Make sure the website gives a full business name and a registration number.

* Is the contact telephone number legit - 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.

* Watch out for suppliers who won’t agree to use secure payment methods such as Escrow.com, Credit Card and Paypal Verified.

* 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

An essential source for anyone wishing to make money selling online is going through a Chinese supplier. 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. Liquidation and closeout common stumbling blocks:

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. In order to save on shipping you must Negotiate

Importing success depends on shipping economically. 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. Can you really afford to drop ship?

In theory Drop shipping sounds great - 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. Put together a warehouse storage checklist

The most important consideration when locating warehousing to store your items is Asset management. 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. Wealth of a Power seller

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. Building a website and eBay store leads to wholesale Growth

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.

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.

Alex Jones never thought Wal-Mart would turn his dreams into a nightmare. Alex is what you would call an all American guy. He grew up in a small town in Oklahoma with a population of 22 people. He worked on his father’s farm growing crops and selling them to the local market. Since Alex was a young boy he had dreams of owning his own company. Never did he think his dreams would be ruined by one company.

When Alex was 19 he left his father’s ranch and attended a college in South Texas. He graduated with a degree in chemical engineering. As soon as he graduated he landed a job with Procter and Gamble. He was responsible for developing their detergent category. Alex was always coming up with new and inventive products. One of his products he developed was a special detergent that his company was not willing to market. Alex decided to quit his job and market the product on his own. He knew he had a great product but did not know how to sell his product to mass retailers.

When Alex quit his job he only had his 401(k) and some other money he saved up while in college. He cashed in his 401(k) and used that money to mass produce his detergent. Since Alex had experience in manufacturing he was able to rely on some of his industry contacts. He thought if he was going to put all he had into this product he was going to sell it to the largest retailer.

Alex picked up the phone and proceeded to call his local Wal-mart. Wal-mart is the largest retailer in the world. The company has more than 4,200 stores in the United States with more than one store opening every month. Wal-Mart’s headquarters are located in a small town in Arkansas. If you have ever been to their headquarters you would not be amazed

Alex was able to speak to the store manager which directed him to their company website. He received all the information he needed to become a Wal-mart vendor. He completed all the tedious paperwork they required and waited for a buyer to respond. Unlike most potential vendors he was excited to receive an invitation to meet with their household buyer.

On a hot summer day in July Alex met with Jim the household buyer. Jim looked like he just graduated from high school until he started to speak. Jim asked Alex all kinds of questions like what is your production capabilities and if he was financially able to supply a major retailer the size of Wal-mart. Alex was able to answer all of Jim’s questions but he did not really understand the volume a mass retailer like Wal-mart could demand.

Three weeks later Alex was approved to become a Wal-Mart vendor and a week later received his first purchase order. Alex could hardly believe the size of his first order. The amount of the purchase order was more than Alex made working for Procter & Gamble’s during his first year. The only thing that made Alex’s heart stop was when the delivery needed to be made. Wal-Mart had given him a two-week window to deliver his first order.

During Alex’s meeting he was sure he told the buyer that he needed at least four weeks to deliver the first order. Since this was Alex’s first order he did not want to seem as if he could not handle the demands of being a Wal-mart vendor. Alex did all he could to make sure the order was delivered at the specified time and that meant even taking a loss on the first order.

Now Alex finally has his product on Wal-mart’s shelves. Alex was able to monitor the sales of his product via retail link. The sales of his product was not what Alex or the buyer expected. His weekly sales were below the categories average. Alex did all he could with the small budget he had for marketing but to no avail. Alex was not able to compete with the name brand products on the shelf.

After five months of low sales the buyer decided to cancel the product. Alex was devastated because Wal-mart was his only account. Alex put all his time and money in developing his product but did not consider the amount of time and money it would take to build the awareness of his product. You can have the best product but if people are unaware of it your sales will suffer. Alex was stuck with the left over inventory and no account to sell his product in. He never thought Wal-Mart would ruin his dreams.