Many people who start a small business online in Canada are new to dealing with wholesale suppliers. Sadly, this can result in expensive, bad decisions or frustration levels that make Canadian entrepreneurs give up entirely. It isn’t difficult to master, however, if you’re armed with accurate information.
Getting Started with Wholesale Purchasing
Understanding the wholesale supply game begins with a basic understanding of the players you’ll be dealing with. Following are typical scenarios in the supply chain.
Large brand manufacturers are at the top of the supply chain but you won’t be dealing with them directly, as a rule. They’re in the business of making products, not distributing them.
Distributors are the next link in the supply chain. They deal directly with the manufacturer and move products to the wholesale level. The vast majority of distributors work directly with manufacturers and will only sell to wholesalers or very large retail stores.
Wholesalers are also distributors. They manage sales and distribute the products produced by the manufacturer through their warehouses. You’ll be dealing with wholesalers for your online store, whether you’re buying inventory or having the products drop shipped.
Somewhere in between you’ll encounter middlemen that aren’t really wholesalers, but technically still distributors. They often have smaller minimum purchase requirements but the prices reflect the smaller volume, along with their cut of the profits. The margins will be way too thin if you deal with middlemen, especially if you’re selling through an online marketplace like Amazon or eBay. You’ll often find this type of distributor in supplier directories or they may present themselves as wholesalers.
The only legit wholesale supplier directory that I’m aware of is provided by Worldwide Brands. They only list verified, true wholesalers that can either supply products to you or directly to your customers (drop shipping). Perhaps most importantly, they will deal with small or home-based businesses. That often allows us to skip the business registration requirements and access true wholesalers, without a business license or extreme purchase minimums.
If you don’t mind the legwork, you can track down legitimate wholesalers in Canada yourself. Finding Wholesale Suppliers for your Canadian Business will guide you through that route.
Now that we’re clear on the supply chain…
Manufacturer >> Wholesaler >> (Middlemen) >> Retail >> Consumer
…we can approach some wholesalers and get accounts set up.
How a Small Business Can Get an Account with a Wholesaler
While Canadians often lament about a lack of wholesale options in this country, industry sales prove otherwise. For example, wholesale sales in October, 2019 were $64.2 billion. That would suggest the problem is more with access than a lack of options. Many small businesses simply don’t know how to find and deal with wholesalers, and they’re often intimidated by the process.
To begin, you’ll have to contact each wholesaler to see if they’re willing to supply products to you and under what terms and conditions. If so, you’ll need to set up an account with them.
The problem is that most of them don’t want to bother with small or home-based businesses, so you’ll spend a lot of time searching and evaluating what they can offer you. That’s why we’ve become big fans of Worldwide Brands. They grant access to over 8000 verified wholesalers who will deal with small businesses, and provide tools to select and contact them.
Either way, once you’ve contacted the wholesaler you’ll receive their information package and their application for an account.
Inventory or Dropshipping?
Stocking physical inventory is risky business for most, but it’s especially scary for small businesses. You’ll have to make sound decisions based on market research and a deep knowledge of your target market. Even if you do your homework, the demand (or lack thereof) can surprise you. Inventory ties up funds and most small businesses can’t afford to have products that don’t move quickly.
Drop shipping lets you sell products one at a time and the wholesaler ships it directly to your customer on your behalf. Not only does that remove the risk of inventory, it also relieves your shipping headaches and reduces expenses like storage or fulfillment fees on marketplaces. In fact, it’s become part of the fulfillment strategy of large businesses too.
“…drop shipping on demand means they don’t have to carry a lot of inventory, which is expensive,” Michele Romanow told the Financial Post in reference to TDOT Performance, a company she invested in on Dragon’s Den.
For more information about drop shipping in Canada, have a look at:
Once you know a product will sell well, you’ll have the option of removing drop shipping from the fulfillment aspect of your business model to bring in physical inventory instead. Otherwise, you can continue to drop ship for as long as you wish.
You may also want to explore the wholesale and dropshipping options available on the Shopify eCommerce platform. You can source from wholesalers or drop ship, or both. Products can easily be added to your store and inventory is automatically tracked.
The problems involved with finding wholesale suppliers for your small or home business, can be solved by finding the right wholesalers for your chosen retail model. Now that you know how to do that, the rest will fall into place.
??? Do you still have questions about the wholesale supply chain in Canada? Please post them in the comments below.
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