Wholesale suppliers are your business partners. A great one will propel you to success and a bad one can shut you down.

Few manufacturers will sell direct so to find wholesalers contact a few of the leading manufacturers in your industry to learn the leading wholesale dealers. Ask them for a recommendation and then follow-up with your own research. Merchandise cost and shipping speed are essential things to look for.

In order to buy items wholesale, a wholesale license is required. Depending on the state where the business is located, the license can be called a seller’s permit, a resale ID, wholesale ID, retail ID or a resellers license.

The wholesale industry is large and about 50 of the largest wholesale distribution facilities generate 25% of industry revenue. Wholesalers serve retailers and other service businesses through a variety of distribution channels and supply chains. At the top of the chain are manufacturers which include importers or exclusive distributors who also sell to wholesalers. Next are wholesalers or regional distributors who distribute the goods locally and brokers or jobbers who deliver goods to local small businesses.

A wholesale purchase is almost always done in bulk. Because of that the wholesaler pays a discounted price for items. The wholesale business is volume-centric so the more you can buy the lower the wholesale price paid. If a new small business, it’s unlikely that you’ll be able to work with a high-volume wholesaler because your sales volume won’t yet support buying in large bulk. Smaller wholesalers will sell and ship to small businesses. As sales increase, you’ll be able to move up the supply chain to negotiate higher volumes and lower rates.

Learn the membership fee, if any, or any extra costs required so you’re not surprised. Membership fees are the norm in the wholesale world. Make sure your supplier is upfront about it.

Ask the cost per unit. Generally, the more you order the lower your cost per unit (CPU) will be. Avoid ordering more than you need, especially if you’re starting out, because if a product isn’t popular you’ll be left with a large surplus and likely take a loss.

Learn the the return policy so if there’s a problem with an order you’ll know if it’s returnable and if so the cost of returning the bulk order.

Ask what the lead time is because when you’re running a drop-shipping business you must keep your customers happy.

It’s important to chose the right wholesale suppliers to ensure that the products you provide customers are the right ones. Even large retailers have fallen victim to fake goods entering their supply chain through wholesalers. The result in damage to brand and loss of trust with customers.