When many ecommerce companies start, they focus on selling individual items to individual customers. Whether they create independent stores or use existing platforms like Amazon and eBay, they want to become successful online retailers.
Not all companies, however, have that goal. Some decide that they want to become ecommerce wholesalers.
More often than not, ecommerce wholesalers sell large numbers of products to other businesses. The businesses may need the products for their own operations, or they may want to sell the products to consumers.
Before you start looking for the most profitable items to sell as a wholesaler, you need to understand that wholesale companies fulfill bulk orders and retail companies sell items individually. Knowing this will help you find a business plan that leads to success for your wholesale ecommerce company.
Profitable Wholesale Items You Should Consider Selling Online
As a wholesaler, you will not earn as much profit from the individual items that you sell. After all, retail companies want to purchase your products at reduced prices so they can sell them at higher prices.
Since you're selling in bulk, you need to know which items can help you generate the most profit.
Since you're selling in bulk, you need to know which items can help you generate the most profit. Some items that earn currently earn healthy profits include:
- Video games
- Smartphone accessories (cases, headphones, etc.)
- Television accessories (stands, mounting equipment, speakers, etc.)
- Fashionable sunglasses
- Children's toys
The Profit Margins of Wholesale Items
While those categories offer terrific ways for wholesale companies to earn money, it's wise to pay more attention to your profit margins than the specific items that are trending right now. In a few months, the wholesale landscape could change dramatically. If that happens, you want to know how you can move on to a new category of products that will help your ecommerce business succeed.
In a few months, the wholesale landscape could change dramatically. If that happens, you want to know how you can move on to a new category of products that will help your ecommerce business succeed.
You can do this by paying attention to the profit margins of wholesale items.
Luckily, it's very easy to calculate the profit margin of each sale. Let's say that you purchase an order of fashion sunglasses for $500. If you sell them to a retail store for $833.33, then you earn a $333.33 and a margin of 40%.
You can calculate the profit margin by dividing your initial cost by the revenue and subtracting the number from 1. In this instance, your math would look like "1 - (500 / 833.33) = .40." You can also use a variety of online calculators that will do the calculations for you.
Keep in mind that you're not making much money from each individual item. Maybe you're only generating $1 from each one. As a wholesaler, though, you make most of your money by selling bulk orders to other companies.
Wholesale Products You Should Avoid
When exploring products to sell, you will inevitably find some options that you should avoid. The worst wholesale products have low profit margins that prevent you from earning much money from your sales.
As a wholesaler, you're unlikely to generate much revenue by selling computer hardware (although computer accessories like monitors and stands are good options). The computer hardware market already has a lot of companies competing against each other. Unless you have a connection that lets you purchase bulk hardware at extremely low rates, it's unlikely that you can compete against the established wholesalers and retailers.
Also, computer hardware is a difficult market because certain items cost a lot to buy. If you're going to purchase 500 top-of-the-line video cards, you could easily spend $250,000. Not many small ecommerce wholesalers feel comfortable investing that much money in products unless they know that they can sell them. Choosing to invest in one product that you should avoid could potentially bankrupt your business.
With some items, you find the opposite problem. They're so inexpensive that you can't generate enough profit to keep your business open.
Take a close look at your expected profit margin before you invest in a product.
Again, it makes sense to take a close look at your expected profit margin before you invest in a product. If you spend $100 on computer screws that you sell for $111, then you're only generating $11 in profit.
Realistically, a product probably isn't worth your time unless you can earn a profit margin of at least 20%.
Other products that you should avoid as an ecommerce wholesaler include:
- Medical equipment and supplies
- Foods and beverages
For various reasons, these products will make it difficult for your ecommerce to stay in business. Furniture, for instance, has a relatively low profit margin, especially after you include the cost of shipping bulk orders to clients.
Wholesale ecommerce companies need to do a lot of research before they decide which products to sell. With a retail company, you can spend small amounts of money investing in new items. If people want to buy the items, then you can invest more in them.
When it comes to wholesales, though, you often have to spend a lot of money purchasing products. The high investment forces you to study trends, calculate your expected return, and make smart decisions based on data.
If you could sell any wholesale item, what would you carry? Let us know in the comments!