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Read this article before you consider buying wholesale
Avoid getting scammed sending your money to Western Union or Bank Wire scammers to pay for wholesale merchandise!

What are secure payment terms?

"Your money is protected even after it leaves your pocket"

It is always good to trust the seller you are buying from, but it is better to protect yourself when you do business with companies from afar. Just as important as the suppliers prices is their payment terms. Secure Payment Terms exist when the supplier will accept credit card, Paypal, L/C, Escrow.com or COD. These are secure payment options because the seller will not be able to scam you of your money when you use these methods to pay.

Whenever you pay a seller by credit card and Paypal you can get your payment returned to you if the goods do not arrive or they are not to your satisfaction. Whenever you pay a seller by L/C, Escrow.com or COD, the seller must wait until you receive your merchandise before they get their payments. The scam sellers do not like to use these payment options because they cannot get away with your money if they decide not to ship the goods you pay for.

The scammers love to ask for Western Union and Bank Wire (TT) payments. These payment options will allow the seller to get away with your money without sending you anything at all. These are un-secure payment options that you should avoid. The true legit sellers will never ask you for these un-secure payment terms because they are in business to deliver your goods, and not to scam you and run away.


The wholesale, drop-shipping and distribution industry is the powerful system that transports everyday merchandise from the manufacturer to the end-user or consumer. The product changes hands several times and gets diverted to many different locations before actually making it to the consumers that purchase these at the retail level.

Anyone working in the merchandising industry must decide what 'business' level on which they will operate; manufacturer, distributor, wholesaler, sub-wholesaler, drop-shipper or retailer. At every business level there are different market pricing structures, minimum ordering requirements and payment terms.

We have been in the wholesale resource industry for several years and have encountered buyers coming to us with unrealistic expectations, that often lead to them getting scammed and losing $1000's of dollars very quickly.

This article is intended to reveal the facts about the buying wholesale in an effort to educate buyers and sellers alike on the reality of this industry. In order to reveal the truth we must disclose the wholesale buyer's myths.

Myth #1: There are manufacturers out there willing to do drop-shipping.

The Truth:
You may have seen some of those selling wholesale lists claiming that they have in their directory manufacturers that will drop-ship single items a a product to your buyers at manufacturer prices.

A manufacturer is a mass-producer of a product, with means they are set up to produce a quantity of several thousands of each item. Their staff are trained and equipped to inventory, package and load bulk quantities for shipping by either container shipping, tractor trailers or rail cars. These goods are then transported to designated distributors, who then re-sell in lower quantities to wholesalers.

Manufacturers do not usually drop-ship because it is not profitable for them to sell in small quantities. Most manufacturers will not even sell to just anybody who wants to make a purchase, you would have to be an authorized distributor that can prove you have the financial resources to even purchase from the factory. The truth is that the lower quantities you sell the higher your operating expenses, and the higher the prices you must charge to your buyers. You will never find a supplier that can drop-ship goods at manufacturers prices.

Myth #2: I can make good profits selling on ebay using drop-shippers to ship the goods direct
to your customers.

The Truth:
Those buying goods from an ebay auction are looking for a lower price on a product that they usually get in the stores at retail prices. Most legitimate drop-shippers offer prices similar to, or even a little higher than those offered on ebay for a specific item. Ebay is an auction site not an ordinary marketplace. Third party drop-shippers cannot compete with the prices for goods being sold on ebay because the buyers there have an expectation to pay less than retail, and sometimes less than wholesale.

I talked with a rep from a reputable drop-shipping company after buying their drop-shipping membership 2 years ago; and he told me that the ebay buyers expect lower prices than they can offer.

The best way to profit on ebay is to purchase your merchandise in bulk quantities from a legitimate wholesaler at bulk prices, and then ship to your ebay buyers yourself. By ordering in bulk and getting the volume discounts, you can fulfill the 'lower price' expectations of ebay buyers. If you desire to go into the drop-shipping business, it is best to sell the goods on your own website or even offline than on ebay.

Myth #3: I can make a huge profit margin percentage selling electronics.

The Truth:
There are more electronics wholesalers and retailers in business than any other type of product. The only way to increase your profit margin is to buy in huge quantity of 10,000 of each item and re-ell then direct in your own retail store-thus eliminating the 'middle man' wholesaler. If you are a wholesaler purchasing electronics to re-sell at retail prices then expect your profit margin to be 10%-20% depending on the item.

The fact is that electronics prices are controlled by the industry makers and cannot be purchased 'dirt cheap' unless you buy it from some guy on the street who may have stolen it and wishes to unload it for a couple of bucks. There is no way you can buy from a legitimate supplier, an Apple Ipod Nano 2GB that retails for $199 at only $75 each. This would be the same as paying $2.79 for a gallon of regular gasoline in California, and then finding the same regular gasoline for only $1.12 in Arizona. The set wholesale prices for a various electronic product is uniform and will not vary that much.

The best way to earn good money on electronics is to concentrate on the volume of sales and not the profit margin percentage. If the average profit on an electronic product is $5 each, then work on selling 2,000-3000 units per month for an average profit of $10,000-$15,000 per month. As a rule of thumb, if you set your prices a little lower and can take a lower profit margin, you will make up for this with more steady buyers and more repeat orders. Besides a 10% profit of $50,000 in sales is only $5,000; but a 5% profit of $200,000 in sales is a much higher $10,000.
Myth #4: I can purchase in small quantities and get 'dirt cheap' wholesale prices
The Truth:
People that come to us have such unrealistic expectations about buying wholesale goods. They want to buy
all the popular authentic apparel, shoes and electronics very cheap, with low quantities, pay by secure
payment terms and have an unlimited supply to order. In the real world no one can fulfill all of these
terms. If you want the goods to be at low prices then you must buy at least 10,000 units at one time to get
low wholesale prices they expect.

What we do is bring in wholesalers that have connections to the factory reps. They buy in large bulk and then
re-sell in smaller bulk quantities. Or they put together a buying co-op that allows several smaller buyers to
place orders that will add up to the factory required minimum order before shipping out to the wholesalers.

The wholesaler that is able to sell as few as 25 units may have purchased their stock from a supplier that can
sell as few a 500 units. Every time the merchandise changes hands after they leave the factory, the higher the
prices will be paid by the end buyer.

Myth #5: Locating a supplier willing to sell at low prices, with low minimum order quantities and
secure payment terms us very easy.

The Truth:

There are countless thousands of sellers claiming to get all these authentic goods and at very low
prices, but there is a catch. If you are to purchase at low prices then you will have to buy in very high quantity
amounts. If you can't purchase in large quantities then you will have to pay higher prices. When someone
promises you very low prices such as a Nokia 8800 phone for $200 or an Xbox 360 for $200 each, then
you should question about their required payment terms.

Others will promise you the lowest prices, but most of these sellers are overseas companies that ask you to
send untraceable payments by Western Union or bank wire. Ask yourself, Is the potential of getting the
lowest prices worth risking $10,000-$15,000 of your money?
See the following price list submitted to us by a UK seller. Notice that these prices are extremely low and check out the payment terms required by this seller.
MOQ is 20 units

THIS IS OUR FULL STOCK LIST AND PRICES:


The true fact is that those legit sellers offering secure payment terms do charge higher prices because the
expense of a merchant account, and Paypal. If you are ordering very large orders from a legit seller then you
need to pay by a Letter of Credit (L/C) and not Paypal or credit cards.


Conclusion
The truth about buying wholesale is that everyone who sells wholesale is either a middleman or a broker. Otherwise you would have to buy direct from the manufacturer. Not many people can afford to do this because the manufacturer requires bulk minimum orders of 10,000 or 50,000 or more. The manufacturers do not deal with small time buyers like you and me because it is not worth it to sell 1, or 2 or 10 items.

Most people are looking to buy direct from the manufacturer and get low minimum quantity and factory direct prices. This is not possible. If so then we can put Walmart or Target out of business. The wholesale industry is well protected to keep these low prices out of the mainstream, so that the number of those who have the access is limited.

Written by Tremel Ennis of Buildstar Wholesale.com