So you wanna buy direct from manufacturers to start a small retail or distribution operation? This quick article will help guide you in the right direction.
In many cases, a manufacturer prefers to distribute its products to an established retailer or distribution company rather than dealing with an unknown individual. Even if an individual who claims to be a business contacts the manufacturing company he may need to provide proof of his business status. Additionally, the manufacturer may request a bulk purchase. So if you want to buy items directly from a manufacturer on an ongoing basis in the course of business as a small retailer or distributor you’ll need to get a reseller’s permit from your state.
1. Contact your State Franchise Tax Board division or finance department to request an application for a reseller’s or seller’s permit. This is a permit that establishes your company as an official business that plans to resell goods to end users. You’ll likely have to pay a fee for this permit and provide detailed information about your intended business activities. You may also need to register your business with the state before receiving the reseller’s permit.
2. Wait to receive your reseller’s permit in the mail.
3. Call the manufacturer that you want to do business when you have your reseller’s permit and explain your desire to establish a vending relationship. Provide details about your company, including the locations where you plan to sell the items (such as online or in your physical store). The manufacturer will consider establishing a business relationship with you based on your business plan, reputation and company credit report (if available).
4. Fill out a credit application as required by the manufacturer if you want to receive the goods on credit. Negotiate a discount rate and invoicing terms. Fax, mail or email a copy of your reseller’s permit to the manufacturing company to wait for final approval for your distributor account. You may have to sign a distribution agreement with the manufacturer that lists terms.
5. Request a catalog of current available products that you wish to sell to your customers. Submit a purchase order (see here for an example) to the manufacturer listing the items you wish to buy and your delivery address.
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