Here’s  a consise beginners guide to wholesale buying that should give new traders a headstart when it comes locating stock to sell on as a retailer. I hope it is useful.
I can imagine that many of you will be planning to sell online with the Auction site eBay being the most likely platform. Online auction sites, principally eBay, now represent an ideal opportunity for just about any motivated individual to start a legitimate, successful, home based business. The best chance to utilize those pent up entrepreneurial instincts that has come along in quite sometime… possibly ever!
Before starting its worth mentioning what this guide is not. This is not a guide to selling on eBay, there are so many printed

books, e-books and websites dedicated to that subject already. This guide is also not intend as a substitute for professional advice on matters such as accounting or trading law. Also, though certain products may be mentioned as examples during the guide you should not infer that this means they are recommended as being more profitable or more suitable for you to sell. They are only examples.
I am not promising you a millionaire lifestyle or an automated online cash machine that will fuel your bank balance to the stratosphere. This guide will offer common sense factual advice that can help you avoid pitfalls and strengthen your chances of making money.

OK lets get started…. Firstly by considering what you will sell and what kind of seller you will be.

Be the Man or Woman with – the Plan

Nobody got anywhere without a plan. Nearly every successful individual or business I am familiar with stresses the importance of the Plan and a written plan at that. Whilst this guide sets out many of the steps you need to take to maximize your chances of success as well as your profits, you obviously need to make some of the key decisions yourself.

What are my financial goals?

Not everyone starts with the aim of a giving up their job and securing a higher income through their online business. Lets consider the various levels.

· a useful ‘little earner’ to pay for the family holiday
· a significant second income to improve your lifestyle, run the car and whatever else.
· Enough to give up the job you dislike and be the independent entrepreneur you always wanted to be.
· Quit the 9 to 5 and replace it with a much higher income transforming your lifestyle

There are obviously many examples out there of people who fall into each of these categories. So were not talking about anything that is not proven to be achievable. Choose your first goal out of these, or write down your own. Whenever there’s a goal there needs to be a timescale so add this on to the end of your financial goal.

What am I going to sell ?

There are so many categories and subcategories on eBay it is almost certainly better to confine yourself and define your own area. Here are some things to bring into your calculations.

· Are there any products you have a personal affinity for. For example, if you have collected a thousand pairs of shoes over the year maybe this is telling you something.

· What are your storage circumstances? You may like the idea of selling electric scooters but if you live in a one-bed flat on the 10th floor then it may be tricky.

· Some products like say watches or electrical items may need some manual dexterity and practical skills to recondition or repair. If you have two left hands or a techno-phobe then be honest with yourself and let this guide your choice of product.

· Risk adversity. If you go for high value items and have limited start capital then clearly you will start with a low stock level and are very dependant on the success of your early listings. Low value items will mean lots of stock, lower profit per unit and more legwork. Decide your own appropriate level.

· Seasonality. Consider the fluctuations in demand throughout the year of the various products going through your mind. Sunglasses don’t sell well in September but would go a bomb around Easter. If you go for something seasonal try and balance out the peaks and troughs with other products.

· Established market. Spend plenty of time trawling through eBay to get a feel for the products and categories you are considering. Use the advanced search of completed listings to see what results are being achieved.

What kind of seller am I?

You’ll benefit from developing a selling style so you can answer the question – ‘Why should they buy from me?’ Sometimes this is referred to as your ‘USP’s’ or Unique Selling Points.

Here are some examples:-

· Price, I won’t be beaten on price!

· Top Service, fast delivery and a flexible returns policy.

· Rarity, offering items that are hard to find.

· Honesty is our policy – thorough descriptions including positives and negatives.

· Will always beat the High St price by 30% or more.

How much time am I going to invest in this activity?

Set out how many hours a week you want to put into the venture – be realistic especially initially when you are learning the ropes. Your listings will take longer to compile and your processes will not reach their maximum efficiency.

These are the three most basic aspects to your opening plan. When you have read this guide and started putting it into practice you will be able to expand upon it. For now you can write out a summary like this:-

“I am starting a business that will provide me with a second income worth £xx a month within three months. I will be selling xxxxxxxxxxx and xxxxxxxxxx. I am selling on price. I will be working 12 hours per week, two evenings and some time at the weekend.”

It might seem rather short but more at this stage would be superfluous. You’ll soon be able to add to it. Make sure you always keep your plan to hand and review it constantly until it fleshes out into a comprehensive statement.
The Changing face of Wholesaling
Over the last few decades this relatively clean and clear chain has become very blurred. This trend has been mostly driven by the need to maintain margins in an increasingly globalised and competitive world. Manufacturers are more likely to be brand or label owners with their actual manufacturing being outsourced, frequently to contract factories in low labour-cost economies.
We’ve also seen the rise of the Factory Shop. These are both the genuine type where a retail outlet is opened alongside the place where the goods are made and the ‘pseudo’ factory shops where the brand or label owner opens a retail outlet at a shopping park to sell their own overstocks and end of line stocks. There are a number of very popular ‘outlet villages’ in the UK such as the one at Bicester, Oxfordshire.
At distributor level there have also been changes. The distributor would normally be either the exclusive or semi-exclusive source for a given product throughout a defined territory – some time as big as a continent sometimes as small as a UK county. Most companies in this field would be distributors for some products and wholesalers for others. To you as a retailer the main distinction of importance is the minimum order value. A first level continent-wide exclusive distributor is going to have a far higher minimum order value and is much less likely to deal with small traders – your enquiries are likely to be met with a list of wholesale stockists for you to contact.
The wholesale part of the chain has seen some of the most dramatic changes. Just 15 to 20 years ago the UK had a number of major wholesale districts. Commercial Road East London, Hockley in Birmingham, Cheetham Hill Manchester,

Narborough Road Leicester and so on. If you were doing business with wholesalers in those days you could easily visit 100 in a day if you wanted to by visiting your wholesale district of choice.
In the cases of the Commercial Road area of East London and Hockley in Birmingham the changes have been driven by rising property prices. The areas became absolutely prime residential land in very sought after areas. The London wholesale district was, after all, a stones throw from what was rapidly becoming the financial capital of the World ‘London’s Square Mile’ or the City as it called.

A similar effect could be seen in Hockley. Birmingham’s growing prosperity fuelled demand for city centre apartments and some of the most luxurious are now on the same ground as the wholesalers stood just ten years ago.

The trend over the last decade has been one of modernisation and geographical dispersal. As you can do most of your buying online it doesn’t really matter to you where your suppliers are located – notwithstanding my later comments that it is useful to visit some of your suppliers some of the time.

There are more large scale modern and high tech wholesale cash and carrys than there used to be. I would say though, that you should not judge a book by its cover or a wholesaler on the quality of their premises. Focus on the 2 ‘p’s’ - product and price.

Another new phenomenon is the rise of the ‘online’ wholesaler. These have no showroom or cash & carry you can visit. They market their goods exclusively online. This trend can only grow. Logically, like you as an online retailer, they will be saving a great deal on their costs and this should result in some keen wholesale prices.

At some wholesalers premises in the wholesale districts the wholesale prices would come down on a Saturday and it would become retail day – naturally with higher prices. Well now we have the high tech automated equivalent of this. When you first visit a wholesalers website you may think the prices on display do not look to different from high street prices. Don’t worry, once you have registered these ‘retail’ prices will have disappeared and your prices will appear. Some wholesalers, and many of these very good ones, are openly operating as online discount retailers as well. Don’t worry about this just focus on what your wholesale price is and what you think you can sell the product for.

What Margins

Online buyers are by their nature bargain hunters there not just looking for something that is slightly discounted compared with the high street. You’ll have to do much better than that. The other factor pushing down your prices will be the competition which 99.9% of sellers have. The lowest margins are on perfect branded stock especially technology based products. This includes mobile phones which are notoriously difficult to trade in. The highest margins are on ex-catalogue, surplus and end of line stock, especially clothing.

As a trader, whether online, on a market or from a shop you need to keep yourself up to date with real retail prices. You don’t have to wear out the shoe leather to do this these days. Online you can use price comparison websites like www.pricerunner.co.uk and offline there’s always the Argos catalogue. During our survey we even found wholesalers, probably unwittingly, selling at a wholesale price that was higher than the retail price commonly found on the high street. It’s fair to say that this doesn’t happen very often but don’t assume that every line on offer through a wholesaler is going to automatically be at a set percentage difference to the Recommended Retail Price.

RRP – Real or Ridiculous Price?

Price lists and brochures are useful tools for buying and pre-buying research. Suppliers tend to fall into three categories as far as price lists and brochures go.

Many traditional cash & carry wholesalers do not maintain price lists or catalogues for the reason that what they hold in stock is regularly changing and to maintain such information would be a quite an undertaking and expense.

Price Lists and Brochures

Wholesalers who rely less on cash & carry and more on mail order are likely to have a price list and catalogue or brochure at the heart of their marketing effort. You can normally phone for a free brochure or request one from their website. Some ask you to send stamps or a stamped self addressed envelope to receive the information. I think in this day and age this is putting up an unnecessary barrier to achieving a sale. Suppliers I have spoken to who are doing this have pointed out that it filters out the ‘brochure collectors’ and other time wasters.
Finally, there is a growing trend for wholesalers to maintain stock levels, price lists and their brochure online. Most e-commerce enabled websites have stock, prices and image libraries built into their functionality so it is far easier to refer potential customers to this information than to create additional work offline. It is also interesting to check now and again how the stock level of you chosen lines are changing a this will show how many are coming onto the market, how popular the product is with your fellow traders and for how long you are likely to reorder that line.

Understanding the Real Cost

There is, a big difference between cost and price. Lets see how a typical item priced at £20 ends up costing you a lot more before it has reached your customer. For the purposes of this calculation I am not including the either your delivery cost to the end consumer or the cost you incur in getting it to them. So there you are on one of you suppliers website. You’ve seen an item that you think you could sell at a profit. Its unit cost is marked up at £20. You buy 2 dozen. Your invoice then has delivery added, lets say £7.50. You used a credit card for which you paid a 3% surcharge for the privilege. That’s £14.62 to add. To the running total of £502.12 there is VAT currently at 17.5%. That’s £589.99 when the courier knocks on the door with the goods. Divided by 12 and your £20 item is now £24.58.
Still plenty of margin on this line according to your research. It’s now time to start selling them. Let’s assume you are using eBay. You take your item and list it with a gallery image and Buy it Now option. Your listing cost is, as an example, £1.65 It’s cost you £26.23 so far but your item is at least there ready to be bought. A couple of days later and bingo - you get an email telling you your item has sold. The final value fees now kick in on Ebay. As an example, lets say this fee is £2.00. You’ve sold your item but your costs are running at £28.23.
But the positive news is that at least your item is sold and because the buyer has used Paypal the money is already yours and you can send the item off. Hang on, not so fast there’s still the Paypal fee to pay and this is measured against the whole payment made to you including your delivery charge. For this example let’s say its £1.73. That means your item is despatched and in the hands of your happy buyer but the cost of achieving this has grown from the moment you first saw the £20 item up to nearly £30! This was on a very straight forward – buy – list for sale – sell – receive payment – deliver process. Here’s are a few possibilities that can increase your costs even further :-
· Some of the items you have purchased arrive in a condition that means you need to lower your price.
· You mishandle one of your items and render it unsaleable.
· Item doesn’t sell until 2nd or 3rd time you list it.
· Your buyer demands a refund for whatever reason.
· Another buyer enters the market with lower prices. Making it more difficult for you to sell yours.
· EBay suddenly removes your listing for whatever reason and your stuck with the product.
There are many more possibilities.
Well that’s as far I want to go down this road as this is a beginners wholesale buying resource not one on how to sell successfully on eBay. The point of including this section is simple. Many beginners look at what items sell for on eBay and then what the prices are on the wholesale sites. They rub their hands together and think ‘Lovely Jubbly’. Blinded by pound signs they buy in stock with insufficient research and forethought.
When you see a great line for £20 on a wholesale site and you’ve seen it selling on eBay for £40 it’s easy to start thinking ‘I can double my money’. The reality is that you can probably make profit selling it on eBay but set you sights much lower in terms of what your actual profit will be. In the ficticious example I have just taken you through a typical result would have still resulted in a decent £10 or so profit if you have bought wisely.
The best way to keep track the ‘real’ cost and your actual profit is to maintain a spreadsheet. These are the column headings, left to right, you should include.
Item
Your retail (or Buy it Now Price)
The RRP
% Discount against RRP
eBay item number (if applicable)
Purchase Price (ex vat)
Credit Card Charge
Delivery charge
Total Cost (ex VAT)
VAT @ 17.5%
Listing Cost
Total including Listing Cost
Sale Price Achieved
Delivery Charge
My P+P Costs
Final Value Fee from Ebay
Paypal Charge
Total Costs
My Profit.

It may seem like a bit of a hassle but I can assure you it will be well worth it.

Registration

Don’t get stressed out about registering as a customer. There are two types of registration these days. Online registration and ‘in person’ registration.

With more and more wholesalers wanting to do business online the last few years has seen a streamlining of the registration processes. This move has also resulted from the recognition that the internet and eBay in particular has led to a boom in the number of part-time smaller volume retailers. Their websites and their advertisements in wholesaling magazines frequently list ‘eBayers’ as one of their customer groups.

Registering online

In all likelihood you will only ever need to register online with your chosen wholesalers rather than in person. You fill in the online form, click submit and then wait.

The online form will usually include a company name field as well as one for VAT. Whilst the company name field is not mandatory I would recommend that you enter a trading name.
A trading name is a good idea from many angles. As well as setting you apart from a non-trade buyer it will be useful when you are keeping your books. If you enter a company name this will go on to be shown on your invoices. This will be much better when you do your bookkeeping. It will also be useful should you do any ‘in person’ registrations as one of the accepted ‘proofs of trade’ is an invoice showing the company name.

We’re not talking limited company here, though that’s something you may consider in the future, this is simply a trading name. If you are John Smith and you sell watches you could trade as JS Watches. You could match it up with your eBay username or your domain name, if you have one. There is good advice regarding Business names to be found by clicking here you can also register your name on the same site as well as searching a database to see if you preferred name is available.

You will also be asked for your VAT registration number though once again this is highly unlikely to be a mandatory field. Don’t worry if you are not registered most online traders are not. At the time of writing your turnover needs to be above £61,000 to require registration. It’s a little more complicated than that so it may be worthwhile to visit the HRMC website and familiarise yourself with the full details. After all if it is your goal to replace a full time income with profit from your new venture you will almost certainly need to exceed that level of turnover. Don’t forget that’s a turnover figure and may only equate to £10k-£12k in actual profit.

Other fields on the online registration forms are pretty obvious and self explanatory, name, address, phone number, email etc. etc. and you will probably be asked to identify what type of trader you are.

Some registration processes are set up to pend and review each submission but the speed at which some work suggests to me that some are fully automated. You will receive a confirmation email showing your username and password. Then your ready to go shopping! If your password is not one you have chosen for yourself and hence not memorable it is a good idea to change it straight away to one that is. Otherwise you will be forever searching for that registration email.
Registering in Person

Your own circumstances will dictate whether or not you or going to order all your goods online or whether you will be visiting your suppliers in person. I would say that, if you can, try to visit some of your wholesalers some of the time. They can give invaluable advice and you could save on the delivery costs (though remember this needs to be set against your own fuel costs).

When you go through the door of a wholesaler for the first time, one of two things will happen. Staff at the wholesaler will try to ascertain that you are a trade buyer in an informal way buy asking you where or how you sell or how you came to here about them. Or they will simply ask if you have registered and if not they will give you the necessary form. I mentioned at the start of this guide that in the Nineties I was Publisher of a trade magazine called The Trader such was it’s status at that time that many buyers would just roll up a copy in their hand when they stepped into a wholesalers for the first time. It was like an unspoken Masonic sign that communicated that you were ‘in the know’ and ‘in the trade’. Whether this is still the case I wouldn’t know as some time has since past.

Anyway, let’s assume you have been handed a registration form. You may be asked for proof that you are a Trader. Two items are particularly useful here. Firstly, what about a business card? A business card attached to the form will usually be accepted as proof. Getting a business card has never been easier. We use Vista Print. You design you business card online and they arrive in the post a few days later. They are even offering 250 free business cards at the moment you just pay the post and packing. I can recommend them as I have used the service myself. This link will take you straight to the right page.

Secondly, I go back to my point about using a trading name. If you place an order online using your trading name you will receive an invoice and/or a delivery note showing this ‘Company’ name. This invoice is also usually accepted as proof that you are a trader. So you fill out the registration form and attach your business card or a copy of your previous invoice (or preferably both) and hand it back with confidence.

Without wishing to state the obvious – I would not recommend walking in and saying ‘do you do samples’, this will set alarm bells ringing. If you order wholesale quantities of some lines then say that you are unsure of the price another line might reach then in all likelihood they will sell you a single sample of that product provided that your order overall exceeds their minimum order value.

So that’s it you’re registered and ready to go. It really is a much easier process than it was a couple of decades ago. The principal way that wholesalers ensure they are selling to traders rather than the general public is through their minimum order value policy.

Your own Domain?
You don’t have to be planning to open your own website to register a domain. Stockhound uses Go Daddy an american company with extremely competitive prices and a great range of services. You can register your domain for a few pounds and use the domain in your email address rather than something like @yahoo.co.uk, @hotmail.com, @btconnect.com etc etc. ‘admin@jswatches.co.uk’ is going to convey a much more professional image. You can have a simple page on the internet free of any hosting charge as Go Daddy will place some google ads on the page alongside your own content. If you want to go on to launch a website you will need to pay for a hosting plan. Typically £3-£6 per month, once again Go Daddy is very competitive partly because their prices are in dollars and the pound is currently very strong against this currency. One possible draw back is that as they are operating in a different time zone you may not be able to get phone support in the same way as you can with a UK company. Having said that their email support is excellent. If it’s a UK solution you are after Stockhound has also used www.123-reg.co.uk .
Minimum Order Values

You define yourself as a trader or retailer when you buy goods in order to sell them on. Wholesalers open up their wholesale price lists to you if they think you satisfy this criteria. They want to demonstrate that they are not undermining their trade customers buy selling direct to the public and in so doing taking away your own business. ‘Trade Only’ notices are posted as much to reassure you as a trader as to put off members of the public.

Many wholesalers relax their minimum order values (MOV) for second and subsequent orders enforcing it only for your first order. Stockhound surveyed over 150 wholesalers with regard to minimum order values. The lowest we recorded were £50+vat the average was £150+vat and at the upper end £300+vat. Off course, the main thing dictating the level of the MOV is the margin that the wholesaler achieves for themselves in the sale. If it’s a low margin then the MOV will be higher and if they are getting a higher margin then they are likely to accept a smaller MOV. You should also look for the level of order required to get you free delivery as this could make you an important saving. An order of, lets say, £300+vat of watches, sunglasses or small electricals is probably going to cost you between £8 and £12, which is 3%-4%. This is a useful increase in your profit margin if you can get it.

Operating alongside the Minimum Order Value there can also be Minimum quantities. As well as reaching an overall monetary value level you may need to order at least a given number of a particular ‘line’ or product. Maybe ‘6’ watches or a ‘dozen’ women’s blouses. This can also be dictated by how the goods are packaged at the wholesalers.

If there are a gross (144) of widgets in one carton then that may well be the minimum number you can order.

Larger, higher value items like an LCD TV is more likely to be available as singles.

Payment Methods

Paying Online

If you are buying online you don’t necessarily have to use a card. Many wholesalers will give you the opportunity to send in a cheque in response to their emailed invoice. Many companies use a company chequebook as their main payment method. It’s fair to say though that this is a declining trend. It is also the slowest method. You get your invoice, send your cheque, wait for it to clear then wait for your own delivery. It’s easy to see how this could stretch to 7-10 days. Compare this with online card payments with a next day delivery! After all time is money.

Using credit cards

You may want to or need to give your new business a kick start by ‘borrowing’ money from your credit card. This is far enough but remember that you will be squeezed at both ends for this. Firstly, many wholesalers pass on the merchant fees they themselves pay to accept credit card payments. This is normally between 2% and 3%. In most countries such surcharges are actually against the terms of use of the cards like Visa, Mastercard, American Express etc. In the UK the situation is very different. The Credit Cards (Price Discrimination) Order 1990 provides that it is unlawful for a payment card organisation to prohibit traders from charging differential prices to customers who use a credit card. It is lawful, however, for the payment card organisation to require that any surcharge is limited to the amount of the service charge that they charge the trader.
At the other end, of course, you will be paying interest. The two together may well be adding 5% to your overall costs. Having said that they do offer certain protection and are convenient. If, for example, you use one credit card for all your trading activities your statements will help you keep close track on all your purchases, particularly if you use online banking. If you can sell on your stock quickly and at a good margin the extra costs may well be a price worth paying.

As if that was bad enough you actually pay 17.5% VAT on the credit card surcharge element of your invoice. So a 3.0% surcharge is effectively a 3.5% increase.

Debit Cards

Debit cards enable online payments like credit cards but rarely carry the 2%-3% surcharge. Using the same card as you use for your day to day current account activities may make it rather more difficult to keep things separate. Don’t go into unauthorised overdraft to buy your stock as, in all likelihood, the charges you will face will outweigh your trading profits.

Paypal

When your selling you will be frustrated by the fees you have to pay but when buying it is free and convenient. One way or another it’s difficult to live without a Paypal account. In fact. If you don’t have one already you might as well click here and sort it out now!

When you’re buying, Paypal is free to use and convenient because as an online seller you will probably be getting a lot of your income coming into this account. It is also fast and simple. In the same way that you will lose part of your profit when receiving a Paypal payment from one of your customers your supplier will face similar fees. Surcharging for the use of Paypal goes against their terms and conditions in every country apart from the UK. The exact extract from their terms and conditions states ‘Nor does this restriction apply to Pound-denominated transactions by sellers residing in the United Kingdom listing items for sale on a UK-based website.’
Paypal and eBay do everything they can to discourage surcharges and they are disallowed everywhere else. Ebay does not allow any UK listings to include a surcharge. Paypal have withdrawn the coverage offered by their Seller Protection Policy to transactions that have involved a surcharge. The reason that the UK is different to the rest of the world is that that it has specific legislation that permits a surcharge (see credit cards).
Of course, you do not need to have a Paypal account to pay through the Paypal process you can simply use your credit or debit card. I would recommend that if you are going to be trading online and especially if you are trading on eBay you should certainly embrace Paypal and set up an account. More than that you should get to know its tools thoroughly as they could be very useful to you.
Getting a Loan
If you are starting with little or no capital you may consider getting a loan. The rates of interest are likely to be less than a credit card. Remember a loan may need to be secured on your home so it would be a good idea to avoid to much exposure to risk. If you haven’t given up the day job and your looking for a bit of extra cash, perhaps to increase the size of your order then one growing trend has been the so-called payday loan, obviously you pay a fee but as a short term way to get some extra cash it may be worth considering. The best known company doing this is Payday UK.
Delivery

If you are a full time trader/ retailer spending most of your time working from the same place, presumably home, then taking delivery of your stock is simple enough. If you haven’t given up the day job then deliveries can be problematical. You will need to take particular care when ordering to establish the delivery method used by your supplier. Look out for ‘Guaranteed Next Day Delivery’ as this will at least narrow down the arrival time to one business day. You are unlikely to be able to tie it down to a smaller time band as few wholesalers use such a service.
To get next day delivery you usually have to place your order before lunch. So it may me worth doing your buying earlier in the day rather that later.It is commonplace for delivery to be free of charge if you order over a certain amount. If the minimum order is £250+vat then free delivery may click in at £500+vat. This is worth bearing in mind, certainly if your order is already close to the free delivery level.

The Small Print - Wholesalers Terms and Conditions

All business operate terms and conditions, even as a small trader you will probably have some. Here’s what your likely to find on a typical set of Wholesalers terms and conditions.
‘These terms and conditions do not affect your statutory rights’
Meaning that the law is the law and that whatever is put in a set of terms and conditions it cannot alter the rights you have under relevant legislation. We take a quick look at key legislation at the end of this guide.
‘Minimum age 18’
You will invariably need to be 18 or over to buy from a wholesaler.
Product description disclaimer
There will often be a disclaimer stating that they as a wholesaler have relied for the product description on information from other parties such as the manufacturer. They may state that they cannot be held responsible for the accuracy of such information. Whether this is actually enforceable is a debateable point. It is not a bad idea anyway to look at more detailed information on the manufacturers website if there is one.
Typographical Errors
The T’s & C’s will usually have a clause relating to typos particularly incorrectly entered prices. Essentially in these circumstances they reserve the right to disallow the transaction.
Copyright and Intellectual Property
There is likely to be a standard copyright notice prohibiting unauthorised use of text or images from their website.
Returns and Refunds
This will highlight the terms under which returns and refunds come into play. Inspect your delivery as soon as it arrives, not just to make sure that it is all there but to check the condition.
Resale of High St store products

This is particularly important if you are going to be retailing ex- chain store clothing. There is likely to be a clause stating that it is a condition of sale that the source of the stock is not mentioned and that labels and tags that identify the source of the stock must be removed prior to sale.
Deal or No Deal?

If you buy online your options to do a deal are limited. If you visit your wholesaler in person you have the same opportunity as if you are in any marketplace. If you visit a website and see they have 25 of a particular item left in stock and are interested in having all 25 you could always try sending an email offering to buy the rest of their stock but could they do a 5% discount off the published price. It costs nothing to ask and they may be pleased to close off that particular line. If you don’t ask you don’t get and who knows now and again you will be successful. It’s true to say though that do a deal face to face is much more likely that doing one online. Another reason to try to visit your wholesaler now and again and maybe with cash in your wallet rather than cards.
Another tip falling into the ‘sorry this is a bit obvious’ category is that if you are at a wholesalers premises where other buyers are present, don’t ask for a deal or a discount. Wait until you are on your own with someone who is able to make the decision.
Don’t factor in to your forecasting that you can always do a deal. Assume you cannot and take it as a bonus if now and again you get an unexpected discount. It’s not just Oxford Street retailers who hold ‘Sales’ – wholesalers do too only they may not call them that. Many of their websites have clearance sections or ‘specials’. They also communicate special offers via their newsletters. Clever buying as I stated at the outset, is key to your success. Your main tool in this is information. I will introduce you to a service later that will go a long way in helping you to achieve this.
As far as informal ‘negotiating’ goes our research suggests that it is not widespread but as traders themselves they are unlikely to be offended if you give it a try. If your placing a decent sized order why not ask them to ‘throw in’ free delivery? This may save you a tenner and as they say ‘If you don’t ask you don’t get’!
Opening Hours

Of course suppliers with a fully functional website are open 24/7 for business. As far as Cash & Carry’s go they typically open by 10.00am during the week and close around 18.00pm. Some have one or two late evenings per week until 20.00pm with Thursday the most likely. At the weekend most are closed all day Saturday and open for a few hours in the morning on Sunday.

Based on our own experience, if you are planning to visit a wholesaler at the margins of their opening hours then call to check they will be open. Some good wholesalers are not necessarily big businesses and their opening times may be reliant on whether the owner/proprietor is going to be there. What I mean is that if you only have 10 minutes to spare after their official opening time then call before you arrive, preferably the previous day to check that there will be someone there to receive you and give you valuable advice.

Surplus/ End of Line Stock
Technology advances, fashions change almost every product line gets deleted at some point and replaced or updated. The timing of this can be dictated by the launch of a new brochure a trade show event or a whole host of other factors. In a perfect world it would happen when stocks of the product have been exhausted. In reality this doesn’t happen.
When the time is up for a given product the remain stocks of the product are referred to as ‘end of line’ stock. It is not just at manufacturer/label owner level that ‘end of line’ stocks can accumulated. A retailer can cease to stock a line to make room for a new one. Catalogue retailers may decided to take it out of the next version of their catalogue. Whatever the reason it represents an opportunity to traders. The stock is sold at a discount to ‘regular’ stock whilst the goods themselves are brand new.
A word of caution here. The goods may be described as in ‘excellent’ or ‘brand new condition, but this may not in very case extend to the packaging. This stock has ‘done the rounds’ through the distribution chain and may be showing this with creases, tears or scuffs on the packaging. This may well be explained on the websites of your suppliers. It may also be worth putting in your own terms when you sell the goods on.

Catalogue Returns
A no questions asked customer returns policy is very much a part of retailing life these days. It used to be Marks & Spencers who stood out in this area and benefited greatly as a result. Now the practice is widespread. Argos for example has a 16-day ‘changed-mind’ money back guarantee. Customers return the item unused in the original packaging in ‘saleable’ condition for a full refund. Now there are many reasons to return an item, ‘didn’t like the colour’, ‘decided I couldn’t really afford it’, ‘couldn’t get it to work’, ‘unwanted present’ etc etc.
Wholesalers of ex-catalogue goods are not supposed to refer to the particular ‘catalogue’ or store that was the source of the goods when they are advertising the wares. On the non-clothing side the chances are they are from Argos, by far the UK’s leading catalogue based retailer. Now another great online phenomenon has come into play in this area too!! Argos are selling their returns by auction on a dedicated website. Anyone can purchase the stock and the registration process is very simple. All goods, however, have to be picked up from their warehouse in Daventry. It is sometimes possible to view the lots in Daventry before bidding.

Graded Stock
Graded stock is a term given to products that have been returned to a retailer / manufacturer for any number of reasons, Unwanted Gift, Missing Part, Failed Delivery, Unsuitable Item etc. The three most used grades are ‘A-‘, ‘B+’ and ‘B-‘ though ‘A-‘ is also sometimes referred to as A2. There is no precise industry standard as to the definitions of each grade so it is worth checking the definitions of each supplier. You may find this information in their Terms and Conditions.

 

Probably the best known name in this area is Argos they define things as follows:-

“A-” – Customer returns and ex display in virtually “As New” condition & complete with all accessories.

“B+” – Customer returns in graded condition with minimal signs of use. Complete with accessories (may not have instruction books). Mostly in original boxes.

“B-” – Customer returns missing some accessories but working. More visible signs of use.
You may also come across the term Raw returns, this means that the individual items have not been checked or graded. In theory you should get a mix ranging from perfect pristine stock to B-. It really is a lottery as to what you end up with and you will almost certainly need to do some checking and minor ‘repair’ work like replacing batteries etc. Raw returns are rather a risky way to start trading but as long as you know the downsides there is the upside that they are usually sold at a very low percentages of RRP. Leaving scope for a healthy profit margin.
Copy or Counterfiet Goods
Just a quick note to state the obvious. Selling counterfeit goods is illegal and could bring your new venture to a jolting halt pretty rapidly.
Of course, the easiest way to avoid selling counterfeit goods is to avoid buying them in yourself in the first place. UK wholesalers are extremely unlikely to attempt to sell you counterfeit goods. You will, however, be very likely to be contacted by email with offers of counterfeit products from overseas, mainly China. Avoid these like the plague. Don’t respond to their emails otherwise you will suffer a torrent of similar emails. European Directives give customs officials the right to destroy goods at EU borders and brand/label owners are extremely active in this area.

If you are selling branded goods try to get as much reassurance, including documentation, about the authenticity of the goods. Your customers will be equally interested in such reassurance.Copy items that are similar to branded goods are not in themselves illegal. The important thing here lies in your description of the items. If you do not make it clear that your item is ‘similar to’ or ‘like’ the branded product and not actually the branded item itself then you could be ‘passing off’ which in turn could lead to legal difficulties.
Dropshipping
Dropshipping is a relatively recent variation on the traditional distribution chain. It has also been called ‘stockless retailing’. It is a process in which products are sold to the end consumer without having to hold any stock. In this process you, as the retailer, would sell products at your chosen price. After the consumer pays you for the item, you would pay the supplier (or dropshipper) their wholesale price and send them your customer’s delivery details. The dropshipper delivers the product to the customer The difference between your price and the wholesale price you have paid to the supplier is your profit. Dropshipping in the UK is nowhere nearly as big as in the United States. The dropshipping philosophy is in it’s infancy but is beginning to take off. Now is the time to begin dropshipping - get in their early before it becomes a standard practice.
How Does Dropshipping Actually Work?
I’ll quickly go through an example using some numbers. You register with a dropshipper so that you can sell their LCD TV’s that are listed as £200+vat. Once this is done you list one of the articles for sale, probably using text and images that the dropshipper has supplied to you. Your price is £350 inc vat. plus £10 delivery. You get a buyer and collect payment from them. You have £360. You order one of the TV’s from your dropshipper and pass your customers delivery details on to them. You pay £235 plus any delivery fee that may be payable. Lets say the total is £243. The dropshipper delivers the item to your customer. The customer receives the TV and at a price that is probably better than the high street. The Dropshipper has sold another unit at their wholesale price and you have earned £117 on the deal. As they say.. ‘everybody’s happy’ !
As small trader or a newcomer to the world of online retailing this type of trading can be extremely interesting.There are no start-up costs, no overheads, no packaging costs or headaches and no storage problems.

Now a word of caution, there are dropship schemes and dropship schemes. Some we have seen look like no brainer no risk opportunities and other, on the face of it, seem impossible to make anything of. You really need to make your own assessment of each one. Look out for companies offering a dropship scheme who are very active in your own marketplace like eBay. One scheme we surveyed was run by a company who sold to end users at prices that were usually below the prices that were being offered to participants in it’s dropship scheme. Under such circumstances you may find yourself putting in a great deal of effort and not getting the returns you need. On the other hand there are schemes run by companies who stay well clear of eBay or similar sales environments.

Don’t dismiss fee-paying schemes out of hand. Nothing in life is free, they say, a scheme asking you to pay a monthly fee is probably delivering better wholesale prices and a better service overall. The best scheme we have seen charges £100+vat per month but gives a great service and deeply discounted wholesale prices. Against this, to justify paying a monthly fee you will need to put in sufficient effort to generate the level of turnover that still produces the profit you are looking for once the fee has been offset. With others doing your order fulfilment you will have more time to focus on your marketing effort.

Another example surveyed and offered by one of the UK’s most established dropshippers offered a variety of dropship packages – gold, silver and bronze. They ranged from £50 to £100 a year. The higher the package the greater the discount you received and hence the bigger margin you had.

If you have limited space or want to choose to sell products that take up a lot of storage then dropshipping may be ideal for you. If you have space and perhaps access to family members will to lend a hand in the processing and packaging of orders you may make more money by not using such schemes.

Of course, you may want to mix dropshipped products with those you sell directly, in some ways this gives you the best of both worlds. One thing is pretty certain – dropshipping as a variation on the distribution chain, is here to stay and can only grow, so it might be a good a good idea to get in at the early stages.

Police and Government Auctions sites
Any source that can offer bikes starting at £1 where the police can’t find the owner to RAF officer shoes at £4 a pair.
Sadly, there are more than two million burglaries in the UK. Many of the items stolen never find their way may to their rightful owners. As a result of this regional police departments dispose of all this unclaimed confiscated, stolen and recovered merchandise. The authorities have to do this in order to make sure that police premises don’t turn into warehouses. The easiest, speediest and most cost-efficient way to dispose of all these items is by auction. Both online auctions and traditional auction rooms are used in this process. Police auctions of confiscated or lost property take place locally and advertising is a matter for the individual force.
As well as stolen goods add the goods earmarked as the ‘proceeds of crime’ goods bought by criminals with cash earned illegally. Plus items sold by bailiffs to pay off tax debts and also the masses of lost property that is handed in and you have a mountain of mainly pre-owned items some of which will be suitable for re-sale. You may have the impression that these auctions are ‘secret’ or reserved for a select few buyers .
You may have seen the advertisements online and in magazines offering to reveal the ‘Secret Police & Government Auctions’ you usually have to take out a rather pricey subscription. You do need to balance the cost against the time it would take you to research and collate the sort of level of information that is available. If your going to buy regularly from this source over an extended period then £30-£40 for an annual subscription is going to be well worth it. The best website we have found on this subject can be found by clicking here. They have 60,000 subscribers so they must be doing something right.
Police auctions of confiscated or lost property take place locally and advertising is a matter for the individual force.
Government ministries and departments also make their own arrangements. The Ministry of Defence (MoD), for example, has a dedicated website for disposing of surplus stock, while the Driver and Vehicle Licensing Agency (DVLA) holds regular auctions of registration marks
Buying Wholesale on eBay
EBay is famously the place where you can buy or sell virtually anything. It should be no surprise then that you can also buy your wholesale stock there. Stock sold using the Auction format throws up the possibility of getting a real bargain. If you click here you can take a quick look at what’s on offer right now. The feedback system will give you a degree of assurance in the event that your transaction is unsatisfactory. (Tip: use the negative feedback tools as an absolute last resort. If you leave negative feedback you will probably get some back in return and this could your own selling activity.
You should be a regular visitor to the Wholesale & Job Lots category and regularly add auctions to your watch list to get a feel for what final price interesting lots are reaching.

Trade Shows
Visiting Trade Shows is definitely time well spent. You can have a look at what is new on the market and meet with potential suppliers face to face. If you’re a good negotiator you could even strike a more favourable deal than you could achieve on the phone. After all, the exhibitors will be very keen to justify the cost of their participation in the event in terms of solid orders.
I knew a well known distributor of posters who sold off their entire stand and exhibition stock at a fantastic price at the end of each show. Each time someone got a terrific bargain. You can imagine that at the end of a tiring 5-day exhibition the idea of not having to pack up all your stock and taking it back to the warehouse is very tempting. So if your going to a trade show looking for a real bargain then you should think about going on the last day of the event.
Here’s a list of trade shows you should investigate.

International Spring Fair Birmingham NEC 4-8 Feb 07 http://www.springfair.com
Off Price Show London Olympia 18-19 Mar 07 www.offpriceshow.co.uk
International Autumn Fair Birmingham NEC 2-5 September 07 www.autumnfair.com
Torquay Fair Torquay Riviera Centre 14-17 Jan 07www.torquayfair.co.uk
Scotland’s Trade Fair Glasgow SECC 21-24 Jan 07 www.scotlandstradefairs.com
Harrogate Home & Gift Harrogate Exhibition Centre 15-18 July 07 www.homeandgift.co.uk
Key Legislation
Distance Selling Regulations
.
If you sell goods or services to consumers by:
· the internet
· digital television
· mail order, including catalogue shopping
· phone
· fax
then you need to know about the Consumer Protection (Distance Selling) Regulations 2000.
The key features of the regulations are:
· you must give consumers clear information including details of the goods or services offered, delivery arrangements and payment, the supplier’s details and the consumer’s cancellation right before they buy (known as prior information)
· you must also provide this information in writing
· the consumer has a cooling-off period of seven working days.

The Consumer Protection (Distance Selling) Regulations 2000 can be seen on the Office of Public Sector Information website
You may also find it useful to refer to the Financial Services (Distance Marketing) Regulations (SI 2095/2004) and the Consumer Protection (Distance Selling) Amendment Regulations (SI 689/2005), which can also be found on the OPSI site
Distance Selling Regulations - what is distance selling?
The regulations cover distance contracts for goods and services made between suppliers and consumers. Business to business contracts are not covered. A distance contract is one where there has been no face to face contact between the consumer and a representative of your business, or someone acting indirectly on your behalf, such as in a showroom or a door to door sales person, up to and including the moment that the contract is concluded.
If you do not usually supply consumers by distance means, but you agree to do so in response to a one-off request, the Regulations will not apply to you. However, if your business regularly handles ‘one-off’ requests and is organised so that it can deal with such requests (for example, there is a mail order facility), you will need to comply with the Regulations.
Distance Selling Regulations - exceptions to the regulations
The regulations do not apply to:
· financial services
· sale of land or buildings
· purchases from a vending machine or automated commercial premises
· the use of a public pay phone
· auctions, including internet auctions
· rental agreements that have to be in writing (i.e. a lease for three years or more)
There are also some partial exceptions. The information and cancellation provisions do not apply to contracts for: accommodation, transport, catering, and leisure services, including outdoor sporting events, but only where the supplier agrees to provide these on a specific date or within a specific period. In addition, the provisions do not apply to package travel, timeshare, and contracts for the supply of food, drinks or other goods for everyday consumption supplied by ‘regular roundsmen’.
Also the right to cancel does not apply to the following, unless you agree otherwise:
· personalised goods or goods made to a consumer’s specification
· goods that cannot, by their nature, be returned
· perishable goods (eg flowers, fresh food)
· un-sealed audio or video recordings or computer software
· newspapers, periodicals or magazines
· betting, gaming or lottery services
· services that begin, by agreement, before the end of the cancellation period providing the supplier has informed the consumer before the conclusion of the contract, in writing or another durable medium, that he will not be able to cancel once performance of the services has begun with his agreement
· goods or services, the price of which is dependent on fluctuations in the financial market.
Distance Selling Regulations - prior information and written confirmation
Prior information
You must provide clear and understandable information to enable the consumer to decide whether to buy. This must include:
· your business name and, if payment is required in advance, your postal address
· a description of the goods or services
· the price including all taxes
· delivery costs where they apply
· arrangements for payment
· arrangements and date for delivery of goods or performance of services
· the right to cancel the order
· how long the offer or the price remains valid
· the cost of any premium rate telephone, fax or internet charges
· whether substitute goods will be supplied if the order is out of stock or unavailable
· If substitute goods will be supplied, in the event of cancellation, you must inform the consumer of the cost of returning any substitute goods.
· the minimum duration for any long-term contract (eg mobile phones).
Written confirmation
When an order has been made you must provide send the consumer with written confirmation of the prior information (this can be by letter, fax or e-mail), unless it has already been provided in writing, for example, in a catalogue or advertisement.
The confirmation should also include:
· when and how the consumer can exercise the right to cancel
· details of whether the consumer is required to return the goods
· information as to whether you or the consumer would be responsible for the costs of returning or recovering the goods
· a geographical address where the consumer can contact you
· details of any after-sales services and guarantees.
You must provide this confirmation at the latest by the time the goods are delivered or, in the case of services, during the performance of the contract.
If you are providing a service with no specified end date or for a period of more than one year, for example, a mobile phone, or electricity supply, you must also send details about the conditions for exercising any contractual right to cancel the contract.
Distance selling regulations - contract performance
You must deliver goods or provide services within 30 days, beginning with the day after the consumer sent an order, unless you agree otherwise with the consumer. If you are unable to meet the deadline, you must inform the consumer before the deadline expires and, unless a revised date is agreed, the consumer must be refunded within a further period of 30 days.
The consumer cannot be obliged to agree to a revised date. If he or she does not, then the contract is thereby cancelled and any money paid must be returned within 30 days.
If you wish to provide substitute goods or services, then this must have been made clear in the prior information received by the consumer before entering the contract.
Inertia selling
The regulations amend the Unsolicited Goods and Services Act 1971 and the Unsolicited Goods and Services (Northern Ireland) Order 1976 to remove any rights of the sender in respect of unsolicited goods and services and any obligations on the consumer.
As such, consumers can retain unsolicited goods or dispose of them as they wish. They are under no obligation to keep them safe or to return them to you. It is an offence for you to demand payment from consumers for unsolicited goods or services.
Other pages in this section
Distance selling regulations - cancellation periods
The regulations give consumers an unconditional right to cancel an order. This is to allow the consumer the opportunity to examine the goods or consider the nature of a service.
If a consumer cancels an order, written notice must be given to you by:
· goods – seven working days from the day after that on which the goods are received by the consumer;
· services – seven working days from the day after that on which the consumer agrees to go ahead with the contract.
If you fail to provide consumers with written confirmation of all the required information, then the cancellation periods can be extended up to a maximum of three months and seven working days. If the missing information is provided during this time, then the cancellation period ends seven working days beginning with the day after the full written confirmation is received by the consumer.
Where a contract is cancelled, the consumer must ensure that reasonable care is taken of any goods received and ‘restore’ them to you. This does not mean that they have to return them - unless you stipulate this in the contract - only that they make them available for you to collect.
You must refund the consumer’s money as soon as possible and, at the latest, within 30 days of receiving the written notice of cancellation. The consumer may, at your discretion, be charged the direct cost of returning the goods, but you must tell them about this in the written information you give them.
If payment for the goods or services is under a related credit agreement, the consumer’s cancellation notice also has the effect of cancelling the credit agreement.
Distance selling regulations - enforcement
These regulations are enforced by the Office of Fair Trading, local authority trading standards departments in England, Scotland and Wales and the Department of Trade, Enterprise and Investment in Northern Ireland.
These bodies are under a duty to consider any complaint received and have powers to apply to the courts for an injunction against any person who is considered responsible for a breach of the regulations.
Sale of Goods Act
The Sale of Goods Act is the main piece of law helping buyers to obtain redress when their purchases go wrong. It is in the interest of anyone who sells goods or services to understand the implications of the Act for them and the responsibilities they have under it.
Essentially, the Act states that what you sell must fit its description, be fit for its purpose and be of satisfactory quality. If not, you - as the supplier - are obliged to sort out the problem.
Aside from the legal issues, it makes sense to comply with the requirements of the Act in order to build customer relationships.
Your responsibilities at the time you sell goods
Whenever you sell goods to a customer you have certain responsibilities. You must make sure the goods “conform to contract”. This means that they must be as you describe them - for instance, a car must be the exact model that you say it is, of the correct engine size and with the same number of previous owners as you tell the customer it’s had. Describing goods inaccurately means the customer may have a claim against you for breach of contract and may put you in breach of the Trade Descriptions Act.
The goods must also be of satisfactory quality, meaning they should be safe, work properly, and have no defects. You could be held liable for any damage, injury or death caused by the use of products you supply - see our guide on product liability.
You must also ensure the goods are “fit for their purpose”. This means they should be capable of doing what they’re meant for. For example, in the case of a pen it should be able to write. But bear in mind that if a customer has made clear they require the pen for a specific purpose - for instance, calligraphy - and you’ve confirmed that it will be suitable, then it must be fit for that purpose. Not only are these your legal responsibilities - they make sound business sense if you want to attract and retain customers.
The Sale of Goods Act
Additional rights for consumers when they make a complaint
Customers who are also consumers, and not other traders, have additional rights. These rights last for up to six years after sale.
Consumers are entitled to ask for either a repair or a replacement in addition to their right to a refund. If they ask for a repair or replacement you should honour their request. But if it’s impossible or disproportionately expensive to repair a product, you can offer a replacement instead.
If neither repair nor replacement are practical options, you can offer a partial or full refund if this would be cheaper for the business. When you’re considering whether to give a full or partial refund, you can take account of the benefits the consumer has gained since they bought the goods.
If you want to dispute a claim by a consumer for a repair or replacement, remember that for the first six months it’s up to you to prove that the fault was not present at the time of sale. However, after six months it’s up to the consumer to prove that the goods were faulty when sold.
If a consumer complains about services you have provided then you should offer a repair or appropriate compensation.
http://www.tradingstandards.gov.uk/consumers/clegis.cfm
The Trade Descriptions Act 1968

This Act seeks to enforce the accuracy of statements made by businesses about goods and services. Most factual statements about goods are covered, except their price - for which see Consumer Protection Act 1987 Part III. It is an offence to apply a false trade description to goods, or to supply goods to which a false trade description is applied. If a trader can show that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence, he may escape liability. The application of the Act to services (e.g. holidays, accommodation, travel, servicing) is more complex. The types of statement covered by the Act are more restricted than for goods, and the prosecution must prove that the defendant made the false statement ‘knowingly’ or ‘recklessly’.

In the context of this guide and wholesale buying remember that your supplier is as responsible for adhering to the legislation as anyone else including you as a trader. Accuracy of description is required for all types of stock whether it be brand new stock straight from the factory or graded stock and catalogue returns.

Remember though that to commit an offence, the description must be false to a material degree, e.g. has a significant impact on a purchaser’s ability to enjoy and/or use the goods/services, or a significant effect on their value. The Act is not intended to cover insignificant inaccuracies; ultimately only a court can decide what would constitute a material degree. There is a great deal of difference for example in a misleading description stating that goods are working when if fact they are not and one that relates to a minor difference in colour shade.

For more information on the Trades Description Act 1968 please visit www.tradingstandards.gov.uk