Funding for Wholesale Products

In order to create and maintain a successful retail business you must first be able to fund your purchase of wholesale products to sell to your customers. It’s important to carefully plan your funding and finances of wholesale products because expenses can quickly accumulate, leaving you with a failed retail business and potentially plenty of unsold products to deal with. To properly fund the purchase of wholesale products, you should start with extra capital to cover additional expenses and should initially plan on spending a large portion of your profits to fund your next batch of wholesale products.

Funding the First Set of Wholesale Products

Having enough funds to purchase your first set of wholesale products is essential in starting your retail business. Wholesale products will allow you to save 10% to 40% off of retail prices but you will be required to purchase the wholesale products in bulk. This means that you will still need a considerable amount of funds to purchase the wholesale products in order to later generate high profit margins by selling the products at retail prices.

Be prepared to spend anywhere from $50 to $5,000 on your first set of wholesale products depending on the size, quality and type of products you wish to sell. It is usually easier to start out by funding the purchase of small low cost wholesale products such as makeup, small computer accessories or even cheap lighters.

For example, you can purchase sunglasses at a wholesale price of $26.00 and sell them for a retail price of $36.00, earning $10.00 in pure profit. However, you will have to initially purchase the sunglasses as part of a bulk package of 15, 20 or even 50 units. 15 pairs of sunglasses at the wholesale price of $26.00 per unit will require $390.00 in initial funds.

Funds for Wholesale Product Expenses

Along with the initial funds required to purchase the first set of wholesale products, you will also have to set aside some funds to cover all the expenses that can pop up when purchasing wholesale products. If you plan on drop shipping your products, you will have to factor in the fees charged for using a distributor’s drop shipping service. Alternatively, you can ship the products yourself but will have to make sure you have enough funds to pay for using your country’s national postal commercial shipping service or a major third party shipping company.

Planning your funds to cover all wholesale product expenses also extends to any potential customs problems that may occur. You will likely have to think about getting your products past customs if you are purchasing wholesale products from a foreign country. Importing wholesale products may incur certain standard custom fees or large penalties if you do not adhere to the country’s customs regulations. Additionally, certain wholesale products are taxed by the importing or exporting country. The tax rate often varies depending on the product and you must make sure that you have enough funds to cover all tax expenses on your wholesale products. In all, you may have to set aside hundreds or thousands of dollars in funds for customs and tax expenses. Avoid this whenever possible by purchasing wholesale products that have already been imported into your country so you end up saving a valuable portion of your initial funding.