2199: [Part 2] Why Buying Wholesale Can Be Misleading by Steve Chou on Starting A Business

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[00:00:55] This is Optimal Work Daily. Why Buying Wholesale Can Be Misleading. Part 2. By Steve Chu of MyWifeQuitHerJob.com.

[00:01:08] Should you buy wholesale and sell other people's products? If everyone can obtain quote-unquote wholesale pricing, things look pretty bleak in terms of starting your own online retail business, right? This is absolutely true if you choose to sell easily obtainable or highly competitive products. For this exact reason, I would never sell electronic goods. Not only is this market extremely competitive, but your products have a time element involved as well. If your electronics go obsolete, you may never be able to liquidate your inventory.

[00:01:37] I would also avoid selling other people's branded products. In highly competitive markets, similar products are susceptible to price erosion. Since you're probably getting the same pricing as everyone else for identical products, a price war is likely to erupt, which will erode your margins. One of the most popular questions I get asked is whether to start a dropshipped online store. And for the exact same reasons outlined already, dropshipping is not a good long-term business model.

[00:02:03] But if you insist on starting a dropshipped online store, you should do so with a plan to transition to your own branded products at some point in the future. In fact, here's a good game plan if you are starting an online store with little or no money. Start out with a dropshipped store to see what items are popular. Your goal is not necessarily to make a profit during this phase. Your main goal is to gather information. Use a service like Worldwide Brands to help find pre-verified wholesalers.

[00:02:30] Once you know which products sell well, then buy and carry these products wholesale in your store at higher margins. And finally, once you have enough capital, private label your own brand for maximum profit. The best way to sell online The best way to sell online today is to source your own products and establish your own brand. The term buying wholesale inherently means that you are selling someone else's products.

[00:02:55] And as a result, it's much harder to establish a strong value proposition when you are selling the exact same items as everyone else. Fortunately, creating your own private label brand is not as intimidating as it sounds. Moral of the story? Pick the market less traveled. Choose a small niche and sell products that are not readily available. Private label your own line of products so no one else can sell exactly what you sell. There will always be competition.

[00:03:21] No matter which market you choose to pursue, there are always going to be competitors, even if you own your own brand. If there aren't any, then chances are your market isn't even worth pursuing. Most people who want to open a store, myself included, often balk during the research phase because they do a Google search only to find several competitors already in their market space. Oftentimes, some of these competitors offer rock-bottom pricing, making you second-guess whether you can make a decent profit.

[00:03:48] Ultimately, there's more to the success of your store than just the lowest price. It all starts by establishing your unique selling proposition. What makes your store special? How can you set yourself apart from the rest? Our wedding linen store offers similar products to over a dozen other websites, and we charge more money for some of these products. And guess what? The stuff still sells. Not everyone is going to make purchasing decisions strictly on price. If the market you've selected is large enough, you'll still make sales if you can make your business stand out.

[00:04:18] With our store, we pride ourselves on our customer service and the useful information we provide on our website. Do you offer superior customer service? Do you offer higher-quality items? Don't hesitate just because you see a bunch of lowball competitors. If you think you can provide value, your business idea may still be a viable one. Avoid competing against big-box stores. It can be extremely frustrating to go up against large retail giants. So, don't.

[00:04:44] Don't go head-to-head against larger establishments because you will definitely lose. Instead, offer items that aren't covered by the large retailers. Large companies have to determine whether it's worth it to carry a certain product and factor in all of the logistics with physically stocking and transporting items to their stores. Oftentimes, they need to sell an enormous, to you and I that is, amount of product to make it worthwhile. But for a small business, if you can find that product that is not worth selling for a large company and sell it in your store,

[00:05:15] you will be well on your way to making some serious money. Frequently Asked Questions About Buying Wholesale 1. Do you need a license to buy wholesale? Depending on the state, some suppliers may ask you for a wholesale license before they will sell to you. In general, a wholesale license allows you to avoid paying sales tax on your purchases, but you are responsible for collecting sales tax from your customers. 2. What is buying wholesale?

[00:05:42] Buying wholesale is when you purchase products in bulk with the intention of selling directly to the consumer. By buying in bulk, you receive a significant discount, typically 50%, which allows you to make a profit when selling goods at the retail price. 3. Is it legal to buy wholesale and resell? It's perfectly legal to resell goods that you've purchased wholesale as long as you have a seller's permit. And 4. How do I find wholesale suppliers?

[00:06:09] The best way to find wholesale suppliers is by contacting the distributor directly. You can also use wholesale directories or sites like Alibaba to find suppliers directly. You just listened to part 2 of the post titled, Why Buying Wholesale Can Be Misleading, by Steve Chu of MyWifeQuitHerJob.com You're listening to a quick ad. You know what else is quick? Selling your car on Carvana.

[00:06:36] Just put in your vehicle information and we'll give you an offer. Done. No hassle. No negotiation. No guy from an online listing lowballing you. Which means, by the time I'm done explaining this, you could have basically done it. But still haven't started? Hey, better late than never. Sell your car today on Carvana. Pickup fees may apply. Pink Panther us here.

[00:07:04] Coach and Spotify are teaming up to bring music and style together. And they want you to be part of it. Grab your friends and head to the Tabby Tour. Hitting cities around the country with live performances from special artists. Exclusive experiences and personalized products. And discover custom playlists on Spotify. Built just for you based on who you are and how you listen. Live your story with Coach. Learn more at Coach.com. And a great finish to this post. Lots of information I certainly didn't know in there.

[00:07:33] So thanks once again to Steve for all of his wisdom and for sharing his experiences with his readers. One thing I didn't mention yesterday is that he also started his own podcast, which is called the My Wife Quit Her Job Podcast with Steve Chu. It's all about entrepreneurs who quit their jobs to start successful online businesses. Through a series of personal interviews, Steve uncovers the exact strategies that led to their successes. Again, that's called the My Wife Quit Her Job Podcast with Steve Chu. And you can find it wherever you get your audio.

[00:08:02] And with that, we have reached the end for today and the end of this two-parter from Steve Chu. I thank you as always for being here. Of course, you're the reason why this podcast can keep going. Your support and sharing the podcast with others when you get a chance. And I will see you back here tomorrow for more great content on entrepreneurship. And that is where your optimal life awaits.