How Wholesale Works for Small or Home-Based Businesses

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. It’s an international directory, however, so Canadian suppliers are limited.

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

Wholesale Supply Chain Diagram

…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.

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:

Wholesale Drop Shipping for Canadian Online Sellers

Checklist: How to Start a Drop Shipping Ecommerce Business in Canada

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.

Problem Solved

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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Digital Business & Marketing Manager at Online Business Canada | Website | + posts

Melody McKinnon's formal education is in business management, which she enhanced with more than 60 certifications revolving around business, marketing, health, general sciences and writing. In over 20 years of working online, she has owned or managed both educational and eCommerce websites.

Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on CanadiansInternet.com, CanadianFamily.net and AllNaturalPetCare.com, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.

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Mita Das

Sir/Mam how to start my small buisness in Canada. I start man cotton shirt buisness. I sent my cotton shirt picture. Please you see.full cotton print shirt.100% cotton. THANK YOU.

Niku

May I simply say what a relief to find somebody who truly understands
what they are talking about online. 

vaku

Great place just reached this site after a lot of research internet is the key to success for any business

Sanjeev kumar

Amazing article Melody McKinnon! Thank you for all the great tips! I might b able to start my drop ship[ business In India yipee

Nancy

My gosh it’s good to find this for Canadians! So frustrating to work it all out to a wholesale process when everything your read is for other countries. Sincere thanks for openly & freely sharing your small biz knowledge & experience!

Jack gill

Your posts are super helpful my friend. . I appreciate your skills. Thanks for sharing.

Varun kumar riat

☛Great post easy to read and useful information i will use it to set up my business too

Rajat jain

I have a ERP Steel Service Center ERP Providers business website now I wanna setup a Drop shipping business is that ok?

sure will do so thanks Melody ji

Todd Cambell

  Lots of great information here, Melody McKinnonI had no idea about DropShip business

Todd Cambell

Your posts are always informative Melody McKinnon. DropShip businessis good I’m a small business owner I really appreciate you have created content .. Thanks!

Last edited 4 months ago by Todd Cambell
Scott Morton

You talked about using Wholesalers for a DropShip business. What are your thoughts about using them for Fulfillment By Amazon {FBA} business?

Kinsey

Nice blog good business ideas definitely will try this.. 🙂

Telma | NFLD

I don’t know where the wholesalers in Canada hide but they’re sure hard to find. Thanks for the help!