How to Start a Wholesale Business Online
Before You Start
Wholesale is fundamentally a relationship and logistics business, not a marketing business. Unlike B2C ecommerce where you need thousands of individual customers, a wholesale operation can generate substantial revenue from 20 to 50 active accounts. The tradeoff is that each account requires more effort to acquire, expects professional operations, and demands consistent reliability. Before committing to wholesale, make sure you have the capital to carry inventory (your biggest cost), the storage space or budget for warehousing, and the operational discipline to fulfill large orders accurately and on time.
You also need to decide between three distinct wholesale models: manufacturing your own products, private labeling products from factories and selling them wholesale under your brand, or distributing products from existing brands as a middleman. Each model has different capital requirements, margin structures, and competitive dynamics. Manufacturers and private labelers control their products and earn the highest margins but need more startup capital. Distributors can launch with a broader product catalog faster but earn thinner margins and compete with other distributors carrying the same brands.
Step by Step Setup
Research product categories with strong wholesale demand by looking at what retailers in your target market are already buying. Trade publications, wholesale marketplace bestseller lists, and industry reports from IBISWorld or Statista reveal which categories are growing and which are saturated. The best wholesale niches have consistent demand (not seasonal spikes), multiple buyer types (boutiques, online resellers, corporate buyers), and enough product variety to build a catalog rather than selling a single item. Categories like health and beauty, pet products, home goods, food and beverage, and apparel accessories all have active wholesale markets with room for new suppliers.
Form an LLC or corporation through your state's secretary of state office ($50 to $500 depending on the state). Apply for an EIN (Employer Identification Number) from the IRS, which is free and takes five minutes online. Then obtain a wholesale license, which most states call a resale certificate or seller's permit, from your state's department of revenue or taxation. This license serves two purposes: it allows you to purchase inventory from manufacturers without paying sales tax (because you are buying for resale), and it authorizes you to collect sales tax on taxable wholesale transactions. Some states require no fee, while others charge $10 to $100 annually. Open a business bank account and get a business credit card to separate personal and business finances from day one.
If you are manufacturing or private labeling, connect with factories through Alibaba (overseas), ThomasNet (domestic US), or Maker's Row (domestic US) to request quotes and samples. Order samples from at least three to five suppliers before committing. If you are distributing existing brands, contact brand owners or authorized distributors to apply for wholesale accounts. Many brands list their wholesale inquiry process on their websites. Build your initial catalog with 20 to 50 SKUs across multiple product lines, which gives buyers enough variety to place meaningful orders without overwhelming your inventory management. Read the product sourcing guide for detailed sourcing strategies.
Calculate your true cost per unit, including product cost, inbound shipping, warehousing, packaging, and a share of overhead costs like insurance, software, and labor. Then set wholesale prices using the standard retail math: if a product has a suggested retail price of $40, the standard wholesale price is 50 percent of retail ($20), and your landed cost should be no more than 30 to 40 percent of retail ($12 to $16) to leave healthy margins. Create two to four pricing tiers based on order volume to incentivize larger orders. The wholesale pricing guide walks through the math with detailed examples for different product categories.
Choose a B2B ecommerce platform that supports tiered pricing, customer group management, net terms invoicing, minimum order quantities, and a registration and approval workflow for new buyers. Shopify with a wholesale app (like Wholesale Gorilla or B2B on Shopify Plus), BigCommerce B2B Edition, and WooCommerce with B2B plugins are the most common platforms for small to midsize wholesale operations. Your storefront needs professional product photography, detailed specifications (dimensions, weight, case quantities, materials), clear pricing tiers visible to approved buyers, and a straightforward ordering process. Most importantly, hide wholesale pricing from unapproved visitors. You want only verified businesses seeing your wholesale rates.
Build a wholesale line sheet, which is the single most important sales document in wholesale. A line sheet is a concise, visually appealing document that shows your products with photos, wholesale prices, minimum order quantities, and ordering information on one or two pages per product category. Also prepare a wholesale terms document that outlines your payment terms, shipping policies, return policies, and minimum order requirements. These documents go to every potential buyer and are what they use to make purchasing decisions, so invest in professional design.
List your products on wholesale marketplaces like Faire (which has over 700,000 active retail buyers), Tundra, Handshake (Shopify's wholesale marketplace), and Bulletin. Register for and attend trade shows in your industry, which remain the highest-conversion channel for wholesale because buyers attend specifically to find new suppliers. Run Google Ads targeting B2B keywords like "[your product category] wholesale supplier" and "[your product category] bulk pricing." Do direct outreach via email and LinkedIn to retail store owners, purchasing managers, and ecommerce resellers who sell products in your category. The finding wholesale buyers guide covers each channel in detail.
Wholesale fulfillment requires different infrastructure than B2C. Orders are heavier, often palletized, and ship via freight carriers (LTL or FTL) rather than parcel carriers like UPS and FedEx. Set up accounts with freight carriers and negotiate volume rates, which can save 20 to 40 percent over published prices. Establish consistent packing procedures with accurate picking lists, packing slips, and shipping labels. Many wholesale buyers have specific requirements for how shipments arrive, including pallet configuration, labeling, and advance shipping notifications (ASNs), especially if you are shipping to distribution centers or retail chain warehouses. The wholesale fulfillment guide covers the operational details.
After Your First Orders
Landing your first five to ten wholesale accounts is the hardest part. After that, the business builds momentum through repeat orders, referrals, and growing visibility on wholesale marketplaces. Focus on perfect execution for your early customers because wholesale buyers talk to each other, attend the same trade shows, and share supplier recommendations. A single reference from a satisfied buyer can open doors to ten more accounts in the same industry.
Track your key metrics from the start: average order value, reorder rate, customer acquisition cost, and gross margin per product line. These numbers tell you which products to expand, which pricing tiers need adjustment, and where to invest your marketing budget. Most successful wholesale businesses reach breakeven within 6 to 12 months and achieve strong profitability by year two as repeat orders compound and customer acquisition costs decline.
As your buyer base grows, consider offering net terms (Net 30 or Net 60 payment) to established accounts, which is standard practice in wholesale and a competitive advantage when buyers are choosing between suppliers. Also explore creating a wholesale dropship program for smaller retailers who want to sell your products without carrying inventory, and begin building retail partnerships with larger stores and chains as your production capacity and fulfillment reliability prove out.