Good & Bad of Spotting Fake Wholesalers

by Marcin Rotter on 15-02-2018 in Australian Wholesale Sourcing Guides

 
Finding Real WholesalersNow that you have chosen your product line, you are ready to look for wholesale suppliers. But, some of them are not trustworthy and might even be fake. How can you tell the difference between a real and fake wholesaler? And, why does it even matter?

We will teach you the difference between real and fake wholesalers. This "Business 101 Guide: Good & Bad of Spotting Fake Wholesalers" will also give you tips on finding the real suppliers.
 

Fake Wholesalers Mimic Real Wholesalers



What is the danger in buying from a fake wholesaler? They have the merchandise I want, right? So, what is lost if I deal with fakes?

There is a reason why they are called "fake." It could mean a number of things: 1. They have not developed a proper relationship with a manufacturer, 2. They are actually retailers or 3. They are selling counterfeit merchandise.

If they have not established a real relationship with a manufacturer, then the manufacturer could pull the plug at any time, leaving you high and dry. Do you want to have your merchandise supply disrupted? Of course not.

If they are retailers, then they are competing with you. You are both retailers. While this is quite common, this is a good time to gauge if your retailing wholesaler has any clearly predefined guide when it comes to pricing, and if they themselves stick to it.

If they are selling counterfeits, then you could get in trouble with the law. How many counterfeit luxury items - watches, jewelry and hand bags - are flowing through the trade circles? If the merchandise is counterfeit, then it is likely to be sub-standard.

Government authorities might see you as part of the scam. Fake distributors can start your business off on the wrong foot. Any way, you cut it - working with a fake wholesaler could damage or ruin your business reputation.

So, those are some of the reasons why you should not work with fake wholesalers: illegitimate relationships, higher prices and counterfeit dangers. So, now "How Do You Spot Fake Wholesalers?"
 

Wholesaler Characteristics



You know that business success can require you to find trusted and reliable companies to work with. This might include lawyers, accountants, banks and suppliers. What are the differences between what a real wholesaler is trying to accomplish and a fake wholesaler is trying to do?

Real Wholesaler Job Description:

A real wholesaler buys large quantities of merchandise directly from manufacturers. Then, he stores this merchandise in a large warehouse. He is probably an expert at logistics – using fork-lifts to move products to and from shelves, trucks or trains.

Does he need to have any marketing expertise? No. That is why there are manufacturers or retailers, like you. You attract the business from the public, a real wholesaler does not.

He understands business to business (B2B) transactions, invoices and paper work. That is his skill set. He is a regular guy.

Fake Wholesaler Job Description:

He wants to make a quick buck. He want attentions.

He really couldn't care less about being efficient, because that is not his business model. He is trying to make money fast. He hopes to be out of town before his victims realize they have been scammed.

He is usually a retailer with sales and marketing experience. He may be cutting corners because his actions are not legal. He might act like a celebrity, who want you to pay to work with him.
 

Spotting Fake Wholesalers



Now, you know the differences between the fake and real wholesalers. What are the tell-tale warning signs of fake wholesalers? Learn strategies to find the legitimate wholesalers and weed out the fakes.
 

Too Good to Be True



Fakes know that you want a low price on your merchandise, so they might promise you a very low price. The problem is that if they are not real wholesalers, how can they afford to give you a discount? Real wholesalers buy in bulk to earn economies of scale discounts.

Con artists might be selling counterfeits - that is how they can afford lower prices than the legitimate wholesalers. They might want you to make a big order before you see the actual merchandise. When it arrives, it might be damaged, broken or sub-standard.
 

Pay to Play



You may be new to eCommerce, so some of the rules might be foreign. Typically, you should not have to pay any monthly fees to order merchandise from a real wholesaler. Just think about it – “You are buying their products, you are already paying them money.”

But, the fake wholesaler might think you are naive. This con artist might try to get you to pony up money, just to sign up with him. He might act like a celebrity.

The “pay to play” mentality is like a Hollywood or Bollywood celebrity. The fake wholesaler wants you to pay to have the privilege of working with him. That should be a “red flag.” He wants to make quick money by having you pay upfront fees. Just say "No."
 

Fakes Are Good Marketers



Think of the top online brands globally – Amazon, Apple and eBay. What do they do? Amazon and eBay are retailers. Apple is a manufacturer. Are any of them wholesalers? No.

Wholesalers are like your “wall studs.” They are essential for the structure of your home, but they are hidden. Wholesalers perform important behind-the-scenes functions. Some wholesalers don’t want to be famous.

The most successful eTailers are great marketers, like Apple. Successful eTailers should be good at marketing. Your customers go on the World Wide Web and must find your products amongst the din of competition. You must get their attention with a great, flashy website.

If you are dealing with a company that seems to be good at marketing, they might not be real wholesalers.
 

High Google Page Rank



Some of the shady, fake wholesalers are really good at marketing. And, that is why they are able to con so many people. They want to be seen and might pay for a high Page Rank on Google.

Websites with high Page Ranks have timely articles, relevant keywords and SEO. What does a warehouse wholesaler know about SEO? He knows logistics.

A real wholesaler does not need a great, flashy website. Why? Because he does not sell directly to the public.

Generally, he will concentrate on logistics and listing product specifications, so businesses will order some of the merchandise he has stores in miles of warehouses. Businesses, like yours, want to know color, product dimensions and packaging requirements. A real wholesaler will focus on listing product data.

So, what good are online searches for finding wholesalers? The wholesalers are there, you just need to be very careful trying to find them. We will discuss how to find real wholesalers in more detail, later.
 

Lacks Contact Information



Have you ever watched “World’s Dumbest Criminals” videos on YouTube? Aren’t those hilarious? Have you seen where the criminal leaves his wallet at the scene of the crime? Now, what intelligent criminal does that?

Fake wholesalers don't want to give you accurate contact information. If they got in trouble, you could send the authorities to arrest them. Fake wholesalers do not want you to be able to find them, after they scam you.
 

Wholesaler Business Model



Understand what a wholesaler expects from you and how your relationship can be profitable for both parties. A wholesaler buys in large quantities from the manufacture, filling his massive warehouse full of stuff. He has the merchandise, but needs money. You have the money, but need merchandise.

His business model is profitable when he can find the most retailers willing to buy the most stuff from him. He wants to develop a long-term relationship with you.

When he is about to purchase new stock from his manufacturer, he will look at monthly orders. If you have been ordering more from him, he can purchase more merchandise at lower prices.

Therefore, all parties benefit when a wholesaler develops a long-term relationship with a successful online store, like yours.

Now, that we have discussed the bad, it is time for the good. Here are the best ways to find reliable wholesalers.
 

How Can You Find a Reliable Wholesaler?



Wholesalers will provide you with the valuable merchandise for your product line. Their pricing model is very important to allow you to have enough space for a sensible mark up. Finding the right suppliers is key to your business success.

We have discussed the traits of the fake wholesalers. They seem to be glitzy and "in-your-face," but where are the wholesalers hiding? Here are a couple of strategies for finding legitimate wholesalers:
 
  • Search Engines
  • Contact Manufacturers
  • Industry Newsletters
  • Paid Directory


The best strategy is to combine all of these methods.
 

Google Search for Wholesalers



So, we explained earlier how fake wholesalers are likely to have a high Page Rank on Google. The wholesalers are there, but hidden. Think about their business model again.

The large warehouse dependent supplier is a classical brick-and-mortar business. It might have resisted creating a website.

The wholesalers are online, but are usually on the later pages. You might need to fine tune your search. Type in the product name and any of the following keywords:
 
  • Wholesaler
  • Distributor
  • Supplier
  • Warehouse


Then, write down the results in a spreadsheet. You can include the pricing information of the legitimate wholesalers, eventually. See, if you can notice any differences between the first pages and later pages.

Next to the selections, you might see an upside-down triangle. If you click on this, it might say "cached" and "similar." If you click on "similar" it will lead you to similar lists of wholesalers.
 

Is This Business Legit?



Once you get a list of potential wholesalers, you can type the following: "Is [Wholesaler Name] Legit?" You are asking if such-and-such a supplier is legitimate. This will bring up reviews and any complaints concerning said company.

The World Wide Web has enabled people to write scathing condemnations of fraudulent brands. If they had a bad experience with a wholesaler, they might have written a negative review.

You can also search using the business name and “review.” See what is out there. Perhaps, someone is compiling a list of bad wholesalers.

But, be careful. Anyone can write a review, so take it with a “grain of salt.” Look for patterns. Are different people complaining about the same problem? That makes a complaint look more credible.
 

Call Manufacturers



When you have decided upon a product line and need a wholesaler, call the manufacturer for a list of wholesalers. They might have even heard of fake wholesalers trying to deceive the public.
 

Industry Newsletters & Trade Shows



If you are having a problem with fake wholesalers, then someone else is probably having the exact same problem. Talk to others. You can join LinkedIn and check out industry newsletters. You can also visit wholesaler trade shows.
 

Buy Wholesaler Directory



Your budget might be tight and you might want to minimize unnecessary expenses, but buying a Wholesaler Directory might be worthwhile. We recommend the SaleHoo Wholesale Directory. They are well-known and well-respected.

Fake Wholesaler Characteristics:
 
  • Flashy & Glitzy
  • Lacks Contact Information
  • Wants to Make Quick Buck
Real Wholesaler Characteristics:
 
  • Straightforward
  • Bulk Buyer
  • Volume Sales to Retailers



Be patient. Finding a reliable wholesaler is worth its weight in gold. That is why it can be so difficult. Only work with 100% confirmed wholesalers.

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