Trying to figure out the big manufacturer vs. wholesaler conundrum? Have you asked the question “what is the difference between a manufacturer and a wholesaler”? Well, I’m so glad you found my blog because, after all these years of living and breathing e-commerce, I’m kinda of a pro at all of it.
But I’m going to tell you right off the bat that I was NOT a pro at first. It really was a step-by-step, figure-it-out-as-I-went sort of process. And yes, it was admittedly filled with some trials, errors, and no small share of “oopsies.”
After nearly a decade, however, I’ve worked with a lot of both wholesalers AND manufacturers, and still do, depending on what my needs are.
So, what is the difference between a manufacturer and a wholesaler?
The Big Picture on E-commerce Product Wholesalers
Wholesalers really are the middlemen (or middlewomen…or middle person…or however you’d like to say it) of the retail industry. They’re not the ones designing and producing products for sale. Instead, they buy them from manufacturers and sell them to you…so that you can turn around and sell them to someone else.
There are a lot of upsides in working with wholesalers, including:
They ship quickly.
Why? Because they only warehouse inventory—they don’t have to take the tip to suddenly cut and sew a bunch of dresses or pound out a metal container. It’s right there, just waiting for you to say you want some.
You can shop easily online.
Most wholesalers are set up so that you can shop very easily online. You find what you need, you add it to your online shopping cart, you pay for it, and boom! It’s on its way to you.
They display all of their products.
Yep—back to shopping online with this one. They want as many people to buy from them as possible, so you’d better bet that they show off every product they’ve got. Can it be a little time-consuming? Um, yes. Can it also be a wildly fun way to spend a Thursday night when you’re not in the mood to think? Um, yes again.
But there is that pesky flipside that comes from working with wholesalers as well.
You can’t customize and you can only buy what they offer.
Essentially, if they offer “x” product in three colors, those are your options. You may want it in orange or purple, but if they don’t have it, you can’t get it from them. Likewise, if you want the same skirt, but shorter, and in a print, it won’t happen. What they have available is what you get to choose from. That means you lose a bit of opportunity to showcase your brand.
They are more of a commodity, which also means more competition for you.
Wholesalers generally have A LOT of a certain product. Think about how many times, for example, that you’ll see the same product in 4 different stores in a single day. Well, that’s because what wholesalers offer is really just a commodity. And because virtually anyone can purchase it, that does mean more competition to you as a seller.
Wholesalers have higher prices.
You definitely are going to pay more when you work with a wholesaler than a manufacturer. That makes sense, right? They need to make money to keep their doors open, too.
The Big Picture on Product Manufacturers for E-commerce
Manufacturers are exactly what their name implies: they make products. If there is something you need to have manufactured, there is undoubtedly a person or company somewhere that can do it for you. Many manufacturers are located in China, but there are also manufacturing companies located in the U.S.
So what do you need to know about working directly with manufacturers? Here are a few key points:
Their website is usually horrible.
I’m not being a mean girl, I swear. It’s just true, especially with overseas manufacturers. (Think website circa 1998-ish.) And there are some pretty good reasons for it—the most important being that they create items for individual customers. While they may showcase a product or two to demonstrate what they CAN do, ultimately their job is to create something from scratch that is yours and yours alone.
They don’t display any of their products.
People have asked me why manufacturers don’t display more products on their site. As I mentioned above, these companies are creating pieces that are made-to-order. By not showing a photo of everything they’ve ever produced, they’re actually protecting their customers (you might be one of them) from copycats. While it may be a little frustrating to you as you look for manufacturers, in the long run, it really is a good thing.
They don’t have a check out button on their site.
Manufacturers generally do not have any “shopping cart” functionality on their site. You can’t just pick a shirt and toss it in your cart. There’s a bit more to it than that. You communicate with them (yes, it’s a little weird at first) to explain what you need, the materials you want to make it out of, the dimensions, etc. Then…
You ALWAYS need to get a sample.
The manufacturer will put a sample together for you to evaluate. This is definitely not a step to skip. There is also some cost involved to you—they’re not going to do it for free. Once you receive your sample, you can communicate the changes you want, verify the materials and sizing, etc.
You need to pay via Paypal or wire.
Visa is not going to work with manufacturers. You must either pay by wire or by Paypal. Is there some risk? Yes. That’s why it’s so important to work with reputable manufacturers like those I share with students in my Master Class.
So why would you want to work with a manufacturer?
- Manufacturers can make almost anything you can dream up, allowing you to bring items to life that are brand new in the marketplace
- You can customize almost anything, from clothing to home décor
- You can brand items with your own company name and logo
- While the upfront investment may be more, you can earn a way bigger profit margin than by going through a wholesaler (no middle-whatever!)
So that’s the basic rundown on manufacturers vs. wholesalers and should help you answer that what is the difference between a manufacturer and a wholesaler question. And you know what? They’re both great resources for e-commerce entrepreneurs like you. It’s just a matter of knowing which works best for your business.
Wish you could just print all this off? Well, good news, friend! I’ve made a printable version of the list of differences in manufacturers vs. wholesalers that you’re going to adore. Just click on the link and it will pop right into Facebook Messenger. Easy-peasy!