How To Become a Wholesale Distributor in 10 Steps (2025)

How To Become a Wholesale Distributor in 10 Steps

Wholesale represents a trillion-dollar opportunity for entrepreneurs. Here is how to launch your own profitable wholesale distribution company.

Wholesale distribution is a lucrative business model within a rapidly expanding market valued at $25 trillion—more than double the size of the direct-to-consumer (DTC) sector.

Rather than selling directly to end users, you can supply products to other retailers in bulk. With tools like Shopify Collective, there has never been a better time to enter this space.

However, before selecting a wholesale ecommerce model, you must weigh several factors. Who will sell your goods? Can you manage the required volume? What will your profit margins look like? These questions can feel overwhelming, particularly for newer businesses.

This guide outlines a step-by-step process for becoming a wholesale distributor, along with tips to streamline your business-to-business (B2B) operations.

What is a wholesale distributor?

A wholesale distributor is a business that either manufactures its own goods or acquires them from a producer. The distributor then resells these items to other retailers in bulk at a price point lower than the recommended retail price (RRP).

How to become a distributor in 10 steps

1. Decide what wholesale niche and products you want to sell

Are your products items that other retailers would want to offer their own customer base—something that fits into their existing inventory? Is your product line cohesive enough to attract retail partners? These are essential questions to ask when considering wholesale distribution.

Once you have selected your wholesale products, identify what makes them unique and incorporate that into your sales pitch when approaching retailers or listing your items on a wholesale marketplace.

Clearly highlight your product benefits on your site and make them the centerpiece of your pitch. Perhaps you utilize a specific manufacturing method, or maybe you ensure retailers understand exactly why your products are worth the investment.

2. Research your target market

Like any business model, a successful wholesale distribution firm requires a plan that defines its target market.

As part of your research, determine whether you have the capacity to supply a large retailer like a department store or if you are better suited for smaller boutique sellers.

Major retailers often impose strict rules regarding product sales—and who bears the cost if losses occur. This can make working with chain stores and department stores both difficult and costly.

If you are just beginning as a wholesale distributor, partnering with smaller retailers might be the smarter choice. You can learn as you grow with less risk than immediately jumping into business with a large seller.

Similarly, consider which type of retail store best suits your product. Would it thrive in a department store, or do you sell a niche item that would perform better in a specialized shop? Keep this in mind as you brand your wholesale offerings and reach out to retailers.

3. Calculate startup costs and profit margins

Run the numbers on your anticipated cash burn and projected profit margins for the first year. Startup costs typically range from $25,000 to $100,000, though they can climb higher depending on your initial inventory, warehouse setup, equipment, and technology.

Build a simple model to determine your upfront requirements:

Inventory buy-in: $15,000 to $60,000 or more (category and minimum order quantities (MOQs) determine the spread).

Warehouse/distribution: $3,000 to $15,000 per year, covering racks, scanners, scales, pallets, and setup fees.

Software: $1,500 to $20,000 or more. Use various software packages or sign up for a unified commerce platform like Shopify that offers B2B and DTC on one platform.

Licenses, insurance, compliance: Between $1,500 and $5,000.

Freight and packaging: $2,000 to $8,000 for inbound freight deposits, cartons, dunnage, and labels.

Working capital: 1–2 inventory turns to cover net-30 or -60 terms.

Next, determine your wholesale price to calculate your margins. A recent readout from financial data vendor CSIMarket indicates that the wholesale industry achieved a gross margin of approximately 15% in Q2 2025. Aim for anywhere between 15% and 30% gross margin when starting your wholesale business.

Need an effective pricing strategy for your business? First, figure out your markups and profit margins. Use Shopify’s profit margin calculator to find a selling price so your product makes a profit.

4. Obtain the necessary licenses

Begin with your federal paperwork. Obtain an Employer Identification Number (EIN) from the IRS. An EIN allows you to open a bank account, issue tax forms, and file tax returns.

Next, wholesale distributors require a specialized business license to resell goods to other merchants. A reseller license, which costs $6,500 on average, proves you are a credible distributor selling legitimate products.

You will need this license in every state where your wholesale business operates. If you are based in California but serve wholesale customers in Tennessee, for example, you will need a reseller’s permit in both states.

To apply for a wholesale license, locate the online application form—usually provided by your state’s tax or revenue office. You will need your EIN and your business’s sales tax ID. Most applications are approved within a few weeks.

5. Understand legal and regulatory requirements

Before the first pallet leaves your dock, you must navigate federal, state, and industry regulations. Missing a form can stall your shipment, leading to daily fines that could wipe out your margins.

Research your specific industry regulations. If you are distributing or storing food, for example, the FDA requires applicable facilities to register and renew every two years under FSMA §415. For cosmetics, the MoCRA law mandates facility registration and product listing obligations. Check current FDA guidance and deadlines before shipping.

For chemicals, distributors must ensure substances are compliant under the Toxic Substances Control Act (TSCA). Generally, chemicals distributed in the US must appear on the TSCA Inventory. New substances require EPA review. If products are pesticides or pesticidal devices, additional FIFRA rules apply.

Before entering distribution, you need reliable suppliers who consistently deliver quality products at competitive prices. Dedicate time to researching potential manufacturers and suppliers—the success of your business depends on them.

Start by evaluating their industry track record. How long have they been in business? What do other distributors say about working with them? A supplier’s reputation can reveal a great deal regarding product quality, delivery timelines, and problem resolution.

Examine pricing structures and minimum order requirements. Some suppliers might offer excellent prices but require large minimum orders that could strain your cash flow during the startup phase. Others may offer more flexible terms that are better suited for new distributors.

It is also worth considering whether your suppliers provide additional support. Some may offer marketing materials, product training, or even assistance with storing and shipping goods. These extra services can be valuable, especially when you are building strong relationships with retailers.

7. Negotiate supplier terms and minimum orders

You must consider volume alongside any rules or requirements the retailer has for their wholesale suppliers.

Pay close attention to their distribution terms and agreements:

What are their payment terms?

How do they handle shipping and logistics?

What is their policy on returns or damaged goods?

These details can significantly impact your profit margins and operations. Ensure you are comfortable with their terms before signing any agreements.

You do have the option to negotiate specific terms and conditions with suppliers:

Payment terms: Longer terms can tighten your own cash flow. You can negotiate a lower payment term or secure a 2/10 net-30 agreement, which offers a 2% discount if paid within 10 days.

Volume discounts: Some suppliers provide price breaks as the order size or annual spend increases.

Exclusive territory agreements: You can negotiate the rights to be the only distributor in a region or vertical. While this puts you in a competitive position, it often comes with high minimum purchase quotas.

Draft a term sheet that covers your ideal situation, including payment, tiers, MOQs, notice periods, and lead time. Provide this sheet to each supplier during negotiations to see if they can meet your requests or compromise somewhere in the middle.

8. Build an online presence with a wholesale ecommerce website

The traditional method of selling wholesale products used to be complex and manual. Now, merchants on the Shopify Plus plan can sell wholesale from the same ecommerce platform that powers their online storefront—giving B2B customers the DTC experience.

The B2B ecommerce platform allows you to:

Create customer profiles for B2B buyers

Hide wholesale pricing behind account logins

Set MOQs for wholesale products

Assign payment terms for B2B orders

Manage tax exemptions, currencies, and localized wholesale storefronts

Advertise wholesale distribution on your DTC website and encourage potential retailers to reach out if they are interested. Brooklinen, for example, has this landing page describing the benefits of buying their wholesale products, complete with an application form to become a wholesale customer.

“It’s been great to have the B2B functionality in the Shopify admin, so we can use the functionality we’re familiar with to spin up our B2B site,” says Elizabeth Bell, director of product management at Brooklinen. “We can have a site that looks and feels very similar to our DTC site but have it be focused on business to business.”

Brooklinen’s trade application.

The photos you use on your DTC website might not work for B2B. Usually, you will want a simpler image on a white background, showing the product exactly as it will appear without distractions.

You can also include pictures showing your products in flat lays or on a model, but an image of the product alone works best as the item’s main image.

Maddox Industrial Transformer, for example, shows a photo of their transformer as the main image. Supporting images and videos show different angles of the transformer and how it might be used in a warehouse.

Maddox’s product page for a wholesale item.

9. Implement inventory management systems

Stock control in wholesale moves quickly, and cash disappears just as fast if pallets linger too long. Build processes that keep inventory lean, compliant, and synchronized across every sales channel.

Inventory turnover: Most distributors aim for 6–9 turns per year. Anything lower ties up working capital in slow-moving SKUs. Review the turnover ratio quarterly and discount or delist laggards before they clog the warehouse.

ABC analysis: Segment SKUs by their impact on revenue. “A” items (the top 80% of sales) receive the tightest reorder points and weekly reviews. “B” and “C” items can operate with looser controls or dropship arrangements. Running an ABC report in your Shopify admin takes minutes.

Safety stock calculations: Prepare for demand spikes without exceeding carrying costs. Use the formula Safety Stock = Z × σ × √LT (where Z is the desired service level factor, σ is the demand standard de. A 90% service level (where Z equals about 1.28) ensures sufficient coverage without overbuying

The best way to approach inventory is through a unified commerce platform. Shopify’s B2B ecommerce platform unifies inventory across DTC and B2B channels. Tiered price lists, minimum order quantities, and real-time stock updates flow from one SKU record, so a bulk order never accidentally oversells items.

10. Launch and market your wholesale distribution business

Getting your wholesale distribution business in front of the right retailers is key to growth. You need a strong marketing strategy that showcases your products and demonstrates why retailers should choose you as their distributor.

Alongside your website, consider creating detailed product catalogs for retailers to download. Include high-quality product images, detailed descriptions, and wholesale pricing information. Many retailers will want to see this information before they even contact you.

Some other strategies to test are:

Partner with complementary businesses: Team up with businesses that sell products complementing yours but are not direct competitors. For example, if you distribute kitchen appliances, partner with cookware distributors to share leads and cross-promote each other’s products.

Develop a referral program: Create incentives for your existing retail customers to refer other businesses. This could be through discount codes, priority shipping, or special pricing tiers.

Run email marketing campaigns: Regular email newsletters keep your retail customers informed about new products, special deals, and industry insights. Segment your email list based on customer size and purchasing patterns to send relevant, targeted content.

Invest in SEO and content marketing: Optimize your wholesale website for search engines by creating content that answers common questions in your industry.

Getting that first order from a new retailer often requires an extra push. Create special offers for first-time buyers, such as:

Free shipping on their first order

Lower MOQs for initial purchases

Sample packs at reduced prices

Extended payment terms for qualified buyers

Seven tips for wholesale distributors

Once your wholesale distribution business is up and running, here are seven tips to grow it.

Build a team that can handle volume

Packaging and shipping large orders can be a significant undertaking—and you need to be prepared for it.

If you are currently handling all the packaging, consider hiring a fulfillment team as your wholesale distribution business grows. You could hire someone to help you package and ship orders.

Here are some questions to help you decide whether you need extra help:

Do you only produce in small quantities?

Could you increase production if needed?

Do you have warehouse space to hold increased quantities until they sell?

How will you distribute large orders?

Warehousing is also something to consider as you scale your wholesale distribution business. As you take on more retailers, you will need more products and additional warehouse space. A third-party logistics (3PL) provider can offer more space when you need it.

Dropshipping is when a retailer sells your products without holding inventory, and you ship them out directly to the end customer. You might offer the retailer a smaller discount in these cases, since you are handling the logistics, but you could consider offering dropshipping if you feel you can handle the orders.

Build relationships with suppliers and retailers

Once you have made the first sale to a new wholesale customer, your work does not stop there. Distributors have much more direct contact with the buyer and follow-up responsibilities than with a DTC business.

Follow up with retail businesses to see whether they liked the products, how their customers responded, and whether there is anything else that the customer needs. You could also show them any new products you will be offering to get them excited.

It is much easier to generate sales from existing customers than from new ones. Plus, retailers who have already made an order are more likely to place large orders. They already trust you and your products—and in most cases, will have received positive feedback from their own customers.

Gone are the days of taking orders by phone and email only. Some 83% of B2B buyers now prefer to self-serve their orders online, and wholesalers can triple order frequency by offering this option.

Set up an online ordering portal so retailers can browse your catalog, place orders, and manage their accounts 24/7 without requiring your help. This is straightforward with a B2B ecommerce platform like Shopify.

As a wholesale distributor, you do not have to put all of your eggs in one basket. Much like DTC business owners who sell through multiple sales channels (like their online store, Facebook, and Instagram Shops), you can drum up new business by listing your products on wholesale marketplaces or attending trade shows.

A wholesale marketplace is an online platform where buyers purchase wholesale items. Popular directories include:

The downside to wholesale marketplaces is that they take a cut of sales. To maintain profitability, most distributors use wholesale marketplaces to reach new customers, then convince retailers to place ongoing orders through their own wholesale website.

Faire’s bestselling wholesale products.

Find the right wholesale prices

Wholesale pricing can be a big challenge that confuses many new distributors. As a distributor, you sell quality products at cheaper prices than RRP—but there still needs to be enough margin to make it a worthwhile business.

Consider if your margins are good enough to offer a proper discount to someone who purchases wholesale. Retailers want to make money from your products as well, so a 10% discount will not be enough to get them to buy your products.

Conversely, you also need to make sure you are not undercharging. You do not want to lose money on your wholesale orders—otherwise, the business will not be sustainable.

Set minimum order quantities for buyers. Consider what businesses you are targeting and what quantities they would likely want to order. If you serve several types of retailers, you could offer tiered pricing for different company sizes and order volumes.

Ashland Conveyor, for example, has a different price per unit depending on how many units a retailer buys. Smaller quantities are the most expensive per unit, which incentivizes potential customers to buy more.

Ashland Conveyor incentivizes higher value orders with tiered wholesale pricing.

Remember: Businesses that buy wholesale typically pay a few weeks after receiving their products, as this allows them sufficient time to generate revenue and cover the cost of inventory. When establishing a wholesale distribution business, decide how long you are willing to wait for payment.

Create an omnichannel experience

Buyers expect a seamless and intuitive experience when engaging your distributor business. To meet their expectations, unify your sales channels under a single commerce platform.

Routing inventory, pricing, and customer data into one place ensures that retailers can place orders and manage their accounts anywhere, whether it is on your website, at a trade show, or by directly interacting with a sales representative.

This unified commerce approach creates a consistent brand experience across all touchpoints. It also allows distributors to be more agile and respond to buyers’ needs, improving customer satisfaction and operational efficiency.

Provide excellent customer service

Set up multiple ways for retailers to reach you—such as through email, phone, or a dedicated support portal. Be clear about your business hours and response times, and consider offering priority support for your larger accounts.

If you have a team handling customer service, make sure they understand both your products and the retail business. They should be able to answer questions about minimum orders, shipping times, and product specifications without escalating every inquiry.

While it is important to have standard policies for returns, exchanges, and damage claims, remember that wholesale relationships are built on trust and understanding. Sometimes, being flexible with a valued retail partner can lead to stronger, more profitable long-term relationships.

💎 Success story: How a young entrepreneur created a beaded empire

Riley Kinnane-Petersen started taking apart old jewelry and reassembling it when she was just five. Now her brand Gunner & Lux is sold in global retailers like J.Crew.

Factors to consider when becoming a distributor

Ideally, you should know your industry inside and out.

Stay on top of market trends, track which products are becoming popular, and understand what your competitors offer. Industry knowledge will help you make smarter decisions on product selection and pricing.

You may have great products to distribute, but you will need to sell them effectively. Communicate your product value clearly on your website and in promotional materials, and learn to negotiate deals that work for both parties.

Wholesale selling is different from direct-to-consumer sales, as you are dealing with retailers who need to be convinced of both product quality and profit potential.

Your success as a distributor depends on your ability to get products where they need to be, when they need to be there. This has become more manageable due to recent supply chain normalization. After years of severe disruptions, freight costs are stabilizing, and supplier lead times are becoming more predictable.

For new distributors, this means you can build your fulfillment strategy with greater confidence. Ideally, you will want to invest in warehouse management software or build partnerships with third-party logistics (3PL) providers or shipping companies.

Consider hiring a logistics expert to help with your fulfillment strategy.

A distribution business requires a big upfront investment and ongoing capital.

Initial investment can range from $50,000 to $500,000, depending on the size of your operation. You will need enough money to purchase inventory in bulk, maintain warehouse space, and cover operating expenses before you start seeing regular income from retail customers.

Work with a financial advisor to create realistic projections and ensure you have enough cushion to weather the early stages of business growth.

Benefits of becoming a wholesale distributor

If you are thinking about starting this type of business, here are the biggest advantages of becoming a wholesale distributor:

Increases your reach: DTC brands have the pressure of finding customers—but when you offer wholesale distribution, retailers can do the hard work for you. It is their job to promote, market, and sell your products in their stores.

Less pressure on customer acquisition: Instead of finding end consumers who might only buy your products once, wholesale customers tend to make repeat bulk orders. You will need fewer customers to make a profitable business out of wholesale distribution.

Simplified order fulfillment: Because wholesale customers buy products in bulk, fewer orders leave your warehouse. This makes the logistics process easier than with DTC.

Common challenges and how to overcome them

Running a successful wholesale business does have its advantages, but there are some downsides to consider as well:

Shipping can be expensive: Retailers buy wholesale products in bulk, and it is harder and costlier to pick, pack, and ship large orders.

Limited control over product display and marketing: Retail distributors can choose how they present wholesale products to their own customers. Keep your brand image consistent by setting a minimum suggested retail price (MSRP) and providing marketing materials such as social media posts and retail signage.

Lower product margins: Wholesale distributors sell products at a lower price than RRP, leaving small profit margins—between 30% and 50%, on average. Make your wholesale distribution channel more profitable by setting minimum order quantities.

Become a successful distributor with Shopify

The decision to break into wholesale can be incredibly daunting for a business. But it is a business model worth considering if you want to expand awareness of your own product or focus on lower-quantity, higher-quality orders.

Follow the steps above to start wholesaling and find your first few customers. From configuring wholesale prices to setting minimum order quantities, you can do it all with B2B on Shopify.

Explore how to run and grow your B2B business on Shopify

Shopify comes with built-in B2B features that help you sell wholesale and direct to consumers from the same website. Tailor the shopping experience for each buyer with customized product and pricing publishing, quantity rules, payment terms, and more.