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How to Buy Wholesale Products [Guide to Resale Business]

Jul. 07, 2025

How to Buy Wholesale Products [Guide to Resale Business]

If you’re someone who is opening a retail store or shop or simply buying wholesale for the first time, it’s paramount to understand the process behind buying wholesale products. The more informed you are, the more profitable your resale business can become.

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How to Buy Wholesale Products

When goods and products are manufactured, they are done so en masse. It's a wholesale company's job to sell these items in bulk to retailers. It's the retailers' job to then secure the actual consumers and sell at a markup as a middleman who has overhead such as marketing, a location, and staff.

As a retailer, you wouldn't buy product from other retailers to sell as your own. You wouldn't be likely to secure the bulk amount you need for your clientele, and you wouldn't turn a profit because the goods are already marked up. That's why retailers turn to wholesale distributors for their merchandise.

Considerations for Buying Wholesale as a Vendor

Buying at retail value as a consumer vs buying at wholesale value as a vendor come with different considerations:

In order to make money dealing in bulk, wholesalers set a minimum order, which means you must be certain of your ability to sell a product at quantity.
You're dealing with higher quantities, so you will want to ensure the quality of a product and its marketability before you buy.
You must consider what the product's current retail value is vs. how much the wholesaler has it priced at... so you can maximize your gross profit per unit.

Tips for Bulk Buying Wholesale

Make a plan and budget on how much money you plan to spend.
Make sure you have the space to store the items. When buying multiple products in bulk, it can be easy to underestimate exactly the quantity of product you ordered at one time.
Buy trendy or seasonal items in bulk before the season starts so that there's enough time to ship and stock the store in time for the optimal purchasing window.
Work with a wholesaler you can trust and ask questions about the products you're considering.

How to Buy Wholesale for Resale

While there are situations in which a consumer may purchase wholesale goods, the vast majority of the time it’s to turn items around as a retailer to turn a profit. With this in mind, there are some questions that will need to be answered to set you up to purchase wholesale goods for your business:

Can I Use My EIN Number or Tax ID Number to Buy Wholesale?

It’s the reseller’s permit (resale number) that allows you to purchase items from a wholesaler without paying sales tax. A personal Tax Identification Number or Social Security Number is not sufficient to allow you to buy wholesale.

Before you apply for your reseller's permit, you must have a federal Employer Identification Number (EIN). This number is issued by the IRS, and it's easy to apply for one:

Gather all of the materials you will need to complete your application. Usually one of the following:

The business owner's Social Security Number
The business owner's individual Tax Identification Number
The business owner's Employer Identification Number

Visit the IRS website and navigate to the section for businesses.
From there, you should be able to find a section for Employer ID Numbers (EINs) that will direct you to the application page.
The IRS website will guide you through your application.

Do I Need a Reseller Permit to Buy Wholesale?

If you intend to resell products you purchased wholesale, you will need to get a reseller's permit (also commonly referred to as sales tax identification number, resale number, or reseller's license). This number allows you to purchase from wholesale distributors without paying sales tax, so it's in your best interest to get one. In addition, many wholesale companies will not enter into a partnership with you if you don't have one. It helps them know that you are a legitimate business. Some states also require the reseller's permit to open a business checking account.

Here's how to get your reseller's permit:

Find out which department you will need to apply for your license. Each state has a different system through which you can obtain one.
Collect the necessary documents before beginning your application:

Driver's license or state ID
Bank account information for your business
Names and locations of your suppliers
Projected average monthly sales figures
Business entity/structure of your business
Incorporation date, corporate number, and FEIN number (if applicable)
(Note that each state may have different requirements, so be sure to ready any documentation the department website provides).

Be prepared to pay a fee to secure your license.
From there, you'll likely receive your resale number right away.

Note: Depending on your circumstances, you may need a reseller's permit for each location your business operates in.

Choosing Where to Buy Wholesale Items

Once you have all the information you need to resell wholesale product, you can begin your wholesale buying strategy. One of the first things that you'll need to consider is what you want to buy and where you want to buy it from.

There are many options on where to buy wholesale items, including:

Directly from the manufacturer
From domestic wholesale suppliers
Through dropshipping partnerships

However, the big thing to consider is the items that are available and how much margin you can get from the markup. These two considerations will drive the conversation on which supplier you end up choosing.

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Advice for Bulk Buying Wholesale to Sell Individually

Some of the best items to buy in bulk and sell at retail prices include:

Electronics
Auto accessories
Musical instruments
Household gadgets

However, as a merchandising specialist, it will be up to you to develop an intuition of which products will fly off the shelves and what your customers really want from you as a retailer.

How Do You Calculate Wholesale Markup?

The next consideration is how much profit you can make on each unit sold. When evaluating which products to buy, you'll want to consider the wholesale price and compare it to the MSRP (Manufacturer Suggested Retail Price). Many manufacturers and wholesale suppliers will give you MSRP numbers so that you have a foundation to start with for how much to value the product at. You'll also want to consider whether you will mark it up to the MSRP or set a price of your own based on your knowledge of the current market and your existing customers.

The goal is to set prices that are competitive but also at a high enough margin to turn a profit for your store. To determine markup, you must set your desired profit margins and then do the markup math.

Here's how to calculate your retail price (what you should mark up your wholesale prices to):

1. Convert Profit Margin to Markup

In order to calculate retail price, you'll need to convert your profit margin into a markup number. While these two terms are commonly confused, markup refers to how much your price is marked up above the cost (wholesale price) while profit margin refers to how much profit you're making on top of your price.

Markup = Margin / (1 - Margin)

If you wanted to have a 40% profit margin, it necessitates a markup of .67 (67%).

e.g. .67 = .40 / (1 - .40)

2. Calculate Retail Price Based on Markup

Retail Price = Wholesale Price / (1 - Markup)

If you purchased an item with a wholesale price of $30, and you wanted a markup of 67%, you would need to price the product at $90.91.

e.g. $90.91 = $30 / (1 - .67)

How to Choose Wholesale Suppliers

The quality of your products affects your bottom line and the reputation of your store. That's why it's so important to work with a wholesale supplier that you can trust. There are a large volume of wholesalers out there, so how do you choose which one to go with?

Speak to the supplier and get a feel for their communication style.
Ask lots of questions!
See if they would be willing to provide a sample.
Research their reputation and see what other retailers might be saying about them.
Take a look at their prices and compare with current retail values to see what the gross profit would be on some of their products.
Evaluate if a large number of your competitors carry the exact items the wholesaler carries. It's better to get unique items than commodity items.

M&M Merchandisers is a Texas-based wholesale supplier that works with pawn shops and other retail outfits. Our goal is to help our customers with merchandising so they can profit and success. On your journey of choosing a supplier, be sure to consider us and apply to become a dealer.

The company is the world’s best wholesale steel products supplier. We are your one-stop shop for all needs. Our staff are highly-specialized and will help you find the product you need.

The Ins and Outs of Purchasing a Truckload of Pipe in the Steel ...

Understanding the Need for Bulk Purchases:
Structural steel workers often require a significant quantity of pipe for their production processes. Whether it's for constructing fences, piling, manufacturing bollards, or other applications, buying in bulk ensures a steady and reliable supply of raw materials. Purchasing a truckload of pipe not only meets the demand but also provides cost advantages compared to smaller, more frequent orders. Buying in bulk often eliminates the added layer of freight cost associated with transporting a load of pipe from the testing facility to a distribution yard where most customers pickup or have delivered smaller quantities of pipe. Buying a full truckload enables the seller to match the buyer with a load of pipe coming directly from the testing yard and shipping it right to the project.

Ensuring Consistency in Quality:
When purchasing a load of pipe, whether it’s used #1 or used #2, one must understand the subjective nature of such terms. The customer and seller must also consider the application in which the material will be used. Purchasing used pipe is never without risk, the nature of used pipe is that it was used in the oilfield. Oilfield pipe after use is inherently imperfect. As players in the industry will tell you, there’s no such thing as a perfect load of used pipe. The lengths will be variable, sometimes threads or collars will be cut off, even in loads of #1 material you may find a joint with a testing hole or a couple sticks with IPC (internal Plastic Coating).

#1 used pipe is considered high end “slick” structural pipe. An even higher bar would be “#1 Brushed & Cleaned”. Brushed and cleaned pipe has been run through a pipe cleaning machine that cleans both the ID (inside diameter) and OD (outside diameter). #1 pipe “should” have minimal pitting or flaking, no blowouts (massive holes from hydro testing), testing holes, splits, IPC (unless otherwise specified), or concrete.

#2 used pipe is lower end but depending on the situation, can be a much more affordable but still quality way to achieve your structural project. #2 pipe may in some cases have blowouts, testing holes, splits, as well as more pervasive pitting and scale/flaking. This is not always the case however, some #2 is simply - less good #1. Some #2 will have no holes or splits and may have low percentages of pieces with any scale or pitting. Ask your supplier for descriptions and pictures of the #2 you are considering purchasing and make the determination based on the application.

In certain situations it makes much more sense to buy #1 pipe vs #2. For example, a fence builder may have a customer who is requesting a high end fence around their property that they wish to have painted. In this case, it makes more sense to go with #1 pipe over #2 because #2 is far more likely to flake and have more significant pitting. Scale, flaking, and pitting will make the paint job look worse and it won’t last nearly as long. On the other hand, it may make sense to buy #2 over #1 if the primary objective is to accomplish a structural project at the lowest possible cost.

Vetting Suppliers & Payment Terms:
In the steel industry, it's common practice for buyers to make upfront payments when ordering a truckload of pipe. This may be stressful to first time or infrequent buyers but rest assured that this practice is normal and not as risky as you may think. Buyers can mitigate their risk of being scammed or taken advantage of using several methods:

Research your potential supplier. Do they have a website, a facebook page, physical address(es) listed. If so, do they have reviews on Facebook and/or Google?
Check the state authority in which the supplier is domiciled. How long has the company existed? Example: Wholesale Steel BCS, Wholesale Steel SA, and Wholesale Steel Lufkin are domiciled in Texas. A customer can look up the entities formation dates on the Comptroller's website.
Does the business have a number? When you call the number, do you get the same person you’ve been corresponding with? If you get a different person, ask them if they know the person you were originally speaking to. Ask the person speaking for the address of the business physical location/storefront. Does it match the online address?
Search the address of the business physical location in Google Earth, does it look like a place you would buy pipe from?
Ask other people in the industry about the supplier, are they well known in their market? How is their reputation?
What questions did the supplier ask you when preparing to initiate the order? Did they collect your contact and billing information? Did they send you a formal invoice? Did their wiring instructions show that they have a real business account (example: Chase for Business wire instructions).
Lastly, if you are still concerned about your supplier, ask them to do a video call. Can they at least show you that they do indeed have a real operation?

If your vendor shows you that they do have a legitimate business with real assets, you probably have recourse and assets to go after in the unlikely case that they do decide to scam you out of your money. Now you know where they are located and your attorney can set about placing a lien on the assets or pursuing a money judgment.

It’s normal for suppliers to ask for payment upfront. Afterall, Amazon takes payment prior to shipping you your goods. You don’t go to Target or Walmart and make it out the door with a cart full of merchandise without paying at the counter. Some suppliers will accept payment upon delivery, or accept 50% upfront and 50% on arrival but those suppliers are few and far between. Transactions like that would require long standing relationships and a certain level of trust for most. Most suppliers have been burned too many times to take the risk. It’s not that the supplier doesn’t trust you, it’s a rule that they place on themselves and their employees to ensure they don’t go out of business. Suppliers of used pipe are in a difficult position because their names have been sullied by bad actors. That’s why Wholesale Steel owners have created the Steel Pipe Exchange to create a safer environment for the pipe industry as a whole.

Benefits of Upfront Payments:

Priority: Suppliers are more likely to prioritize orders with upfront payments, ensuring timely delivery and reducing delays.
Negotiating Power: Upfront payments can provide buyers with negotiating power, leading to potential discounts or more favorable terms in the long run.
Establishing Trust: The practice of upfront payments fosters a relationship of trust between buyers and suppliers, creating a foundation for future collaborations.

Buying a large-priced item site unseen can be stressful, and it's crucial to take precautions to protect yourself from potential risks, including the item not arriving.

Keep Records of the Transaction:
Save all transaction details, including invoices and communication with the seller. Take screenshots of the product pictures if necessary.

Verify Contact Information:
Check and verify the seller's contact information, including a physical address, number, and . Legitimate sellers should provide clear and accurate contact details.

Stay Cautious with Deals Too Good to Be True:
Be skeptical of deals that seem too good to be true, especially if the price is significantly lower than market value. Scammers often use unrealistically low prices to attract unsuspecting buyers.

File a Dispute if Necessary:
If the item doesn't arrive or is not as described, contact the seller immediately to resolve the issue. If communication fails, contact the administrators of the Steel Pipe Exchange to see if they can encourage a resolution - if the buyer and the seller are both members of SPE then it’s often the case that the admins can get to the bottom of a situation. If not, contact an attorney to write a demand letter.

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