Key Takeaways:
- Suppliers care about two documents: your EIN and your state resale certificate. There is no federal “wholesale license.”
- The number on a wholesale price sheet is not your cost; your cost is the landed cost, after freight, duty, brokerage, and any unsold units.
- The $800 duty-free exemption on low-value imports is gone, so overseas orders that used to clear duty-free now incur duty and require entry paperwork.
- Liquor, tobacco, and cannabis have their own buying rules. In most states you cannot buy those categories from anyone but a licensed wholesaler.
Buying wholesale means buying goods at case or bulk pricing from a manufacturer, distributor, or producer, then reselling them at retail. The process is the same whether you run a gift shop or a liquor store: register your business, get a resale certificate, open accounts with the right kind of supplier, price the order all the way to your shelf, then start small and build on what works.
This post covers the whole sequence, filling in the details each step of the way. Read on the learn more.
How To Buy Wholesale in Six Steps
- Get your paperwork: You’ll need an EIN, a state sales tax permit, and a resale certificate. Add a category license if you sell anything regulated.
- Pick the supplier type that fits what you sell: Manufacturer direct, distributor, cash-and-carry, and producer direct all trade price against flexibility.
- Price the order for your shelf: Read the case pack and minimum order quantity, then calculate landed cost including freight and duty.
- Vet the supplier before you commit: References, lead times, fill rates, and a written damage policy.
- Place a small first order and ask for terms: Prepay once or twice, then negotiate net 30, freight thresholds, and mixed cases.
- Reorder from your own sales data: Weeks of supply beats case discounts on anything that does not turn.
Step 1: Get Your EIN, Sales Tax Permit, and Resale Certificate
Retailers don’t need a federal wholesale license. When a supplier asks for one, they almost always mean your resale certificate or sales tax permit number, and the handful of states and cities that license wholesale dealers license the distributor (not you).
You need three documents, plus a category license if you sell anything regulated. Requirements vary by state, and the terminology is inconsistent, which is why this step confuses people.
| Document | What it does | Where you get it |
|---|---|---|
| EIN (employer identification number) | Identifies your business to the IRS. Needed for a business bank account, payroll, and most credit applications. | IRS website, free, issued immediately online |
| State sales tax permit | Registers you to collect and remit sales tax. Also called a seller’s permit or sales tax license depending on the state. | Your state department of revenue |
| Resale certificate | The form you give a supplier so they do not charge you sales tax on goods you intend to resell. Usually references your sales tax permit number. | Your state, or a multistate form your supplier accepts |
| Category license | Required separately for alcohol, tobacco, nicotine, cannabis, firearms, and some food handling. | State and often local agencies |
Buying Wholesale Without a Registered Business
You can buy in bulk without any of this. Warehouse clubs, restaurant supply stores, and cash-and-carry outlets will sell you cases as a consumer, and some manufacturers run outlet pricing open to the public.
You can’t use a resale certificate without being registered to collect sales tax, or borrow someone else’s. That is tax fraud, so the exposure lands on you. Registering is usually a same-week process and costs very little, so there is no real reason to operate around it.
Step 2: Choose the Right Type of Supplier
Not every supplier is trying to sell you the same thing. Knowing which type you are talking to tells you what to expect on price, minimums, and service.
| Supplier type | Best for | Trade-off |
|---|---|---|
| Manufacturer direct | Best unit cost on your top sellers | High minimums, longer lead times, often one product line |
| Distributor or wholesaler | Breadth, restocking, one invoice across many brands | Higher unit cost than direct, and they set the deal calendar |
| Cash-and-carry | Small quantities, same-day pickup, filling gaps | Pay retail-adjacent prices, no delivery, no terms |
| Producer or farm direct | Perishables, local sourcing, differentiation | Seasonal supply, you handle logistics |
| Online marketplaces | Testing new categories and one-off buys | Quality varies widely, and imports now carry duty |
| Liquidators and closeouts | Deep discounts on discontinued goods | No reorders, so treat it as a one-time buy |
Most independents end up with a mix: one or two primary distributors for core stock, direct relationships on their highest-volume items, and a cash-and-carry account for emergencies.
If You Sell Alcohol, Tobacco, or Cannabis:
For regulated categories, the state decides who you can buy from, so this step is settled before you start shopping.
- Alcohol: In most states you must buy from a licensed wholesaler rather than direct from a producer, and some states run wholesale distribution themselves. Several states also set minimum prices or minimum markups.
- Tobacco and nicotine: Purchases go through licensed distributors. Manufacturer scan-data programs can rebate part of your cost, but only if your POS reports sales data correctly.
- Cannabis: State-licensed distribution and seed-to-sale tracking govern what you can buy and from whom.
- Hemp-derived THC beverages: Federal restrictions take effect in November 2026, which changes what you can legally order and stock. See our breakdown of the hemp THC beverage ban before placing further orders.
Step 3: Price the Order All the Way to Your Shelf
The unit price on a wholesale sheet is rarely the number you should focus on. Case pack tells you how many units come in a case, and the minimum order quantity (MOQ) tells you how many cases you have to take.
Work out what one case commits you to. A case of 24 at $54 puts your unit cost at $2.25, so at a $3.99 retail you clear $1.74 per unit and $41.76 on the case. If that case takes five months to sell, you have paid for shelf space and tied up cash the whole time to earn $41.76.
What Landed Cost Includes:
Landed cost is the unit cost plus everything it takes to get the product onto your shelf. Skipping this is the most common reason a good deal turns into a losing SKU.
Add up the following, then divide by the number of units you expect to sell:
- Product cost from the price sheet
- Inbound freight, fuel surcharges, and any liftgate or residential fees
- Import duty, customs brokerage, and entry fees on overseas orders
- Payment costs, including wire fees or card surcharges on prepayment
- Expected shrink, damage, and unsold units
An Example:
Devon runs a gift shop and buys candles from an overseas supplier at $4.10 a unit against a $16 retail. After freight, duty, and brokerage, his landed cost is closer to $6.80, and after breakage he is selling roughly 92 of every 100 units he buys. His real margin is about 54%, not the 74% the price sheet implied.
Base Your Retail Price On Cost (Not Discounts)
Markup is calculated on your cost, and margin is calculated on your retail price; mixing them up is how retailers end up short. A product you buy for $6 and sell for $10 carries a 67% markup and a 40% margin.
Imports: Old Landed Cost Math No Longer Holds
If you source overseas, the biggest change in the last two years is the end of the $800 de minimis exemption. Low-value shipments that used to enter the United States duty-free now require a customs entry and payment of applicable duties, regardless of value or country of origin.
The legal basis for broad US tariffs has also shifted several times, so a landed cost you calculated in 2024 is not reliable today. Confirm the current duty rate for your product’s tariff classification and country of origin, and get a written quote from a customs broker on entry and brokerage fees.
Step 4: Vet the Supplier Before Your First Real Order
Late deliveries and damaged pallets can cost you more than a few points of margin, so vet your suppliers. Ask for and verify the following before you place an order:
- Two retailer references in your category, and call them
- A sample order or a single case before you commit to a pallet
- Written lead times, plus their average fill rate on backordered items
- Their policy on damaged and short shipments, in writing
- Return or swap terms on slow sellers and seasonal goods
- Whether they sell to nearby competitors, and any territory protections
Step 5: Start Small, Then Negotiate Terms
New accounts almost always start on prepayment. After a few clean cycles, ask for terms, because terms are worth more to your cash flow.
Early-payment discounts are worth checking. Terms of 2/10 net 30 mean you take 2% off if you pay within 10 days instead of 30, which works out to roughly 37% annualized, so pay early if you have the cash. Beyond price, the levers worth pushing on are free freight thresholds, mixed cases instead of full case packs, lower first-order minimums, and access to the distributor’s deal calendar.
Step 6: Reorder From Your Own Sales Data
More units at a lower price only helps if you sell them. The cost of holding inventory is real: cash, shelf space, shrink, and eventual markdowns.
Start with your own numbers. Look at units sold per week over the last three months, decide how many weeks of supply you want on hand, and order to that number, adjusted for lead time and seasonality. The economic order quantity formula is a reasonable sanity check once you have reliable sales history, and good SKU management is what makes that history trustworthy.
Ordering Perishables and Short-Dated Goods
Perishables reward tight ordering and punish optimism, so order smaller and more often even when the case price is worse.
Rotate on a first-in, first-out basis so the oldest stock sells first, and check backroom stock against display stock every time you receive a delivery. Track waste as its own line rather than burying it in cost of goods, because a category that looks profitable on paper often is not once spoilage is visible.
Tracking Wholesale Purchases After Delivery
Buying well is half the job. The other half is knowing what you paid, what sold, and what to reorder. KORONA POS receives deliveries against the purchase order, so short shipments and price changes show up at receiving rather than in inventory counts. It also recalculates order levels based on your sales history, flags items running low, and reports supplier-level performance, which tells you whether a distributor’s fill rate matches what they promised.
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Frequently Asked Questions
Do I need an LLC to buy wholesale?
No. Most suppliers care about your EIN and resale certificate, not your entity type, and sole proprietors open wholesale accounts routinely. An LLC is worth considering for liability reasons, but it is not a buying requirement.
What is the difference between a resale certificate and a sales tax permit?
The permit registers you with your state to collect and remit sales tax. The resale certificate is the form you give a supplier, referencing that permit, so they do not charge you sales tax on inventory you plan to resell.
How much cheaper is wholesale than retail?
It varies widely by category, from roughly 20% below retail on tightly controlled goods to 60% or more on general merchandise. Compare landed cost against your intended retail price rather than against another store’s shelf price.
Can I buy wholesale from Alibaba or similar marketplaces?
Yes, and many retailers do, but price the order fully before committing. Since the $800 duty-free exemption ended, those shipments require a customs entry and duty payment, which can change the math substantially.
What is a minimum order quantity?
The smallest order a supplier will accept, stated in units, cases, or dollars. It is negotiable more often than suppliers advertise, especially on a first order or when you are adding a second brand from the same distributor.
How do I get net 30 terms with a new supplier?
Complete a credit application, supply trade references, and run a few prepaid orders first. Most suppliers extend terms after three to six clean cycles, and asking directly after that point usually works.
