Wholesale > Retail Question

[adamhenry]

I don't exactly know what my question is, mostly because I don't know enough about retail, but here's my theory.

If standard retail markup is 50%, but I'm running a home based or online business without the b&m overhead, then is there anything to prevent me from carrying away the business by only adding say a 25% markup to a product? Maybe worst case scenario wholesaler cuts you off if other distributors find out and get pissed? Anything I'm missing?

 

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[Vigilante]

You're not likely to get the same cost as your larger competitors, and you'll get cut off from supply almost immediately as nobody is interested in eroding The market price. Nobody's gonna let you destroy the market.

 

[adamhenry]

Got it. Thanks!

 

[adamhenry]

It just occurred to me that I could avoid this by making arrangements with manufacturers in China directly, through Alibaba. Does that make sense? I have an arrangement with a wholesaler now, but just realized they're simply ordering by the container full from China, so I could just skip the middle man and decide my own pricing. Is this correct?

 

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[jmusic]

It depends on the product (stay away from known brand names or clear knockoffs for example). This idea has been discussed plenty on these forums...

 

[Walter Hay]

It just occurred to me that I could avoid this by making arrangements with manufacturers in China directly, through Alibaba. Does that make sense? I have an arrangement with a wholesaler now, but just realized they're simply ordering by the container full from China, so I could just skip the middle man and decide my own pricing. Is this correct?

Good idea, but avoid Alibaba or you will likely be dealing with a wholesaler in China. You need to buy direct from the manufacturer in China. The majority of suppliers listed on Alibaba as manufacturers are in reality traders.

You might be interested in reading the post Alibaba and the 2236 Thieves in my AMA thread: Sharing my lifetime experience in export/import. Product sourcing specialist.

 

[adamhenry]

Thank you! I have some reading to do, maybe your book too!

 

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