Definiton of buying wholesale

Jewelry Discussion
1

Was: Praise for Rio Grande

What is the concise definiton of “wholesale?” I’ve always thought
that wholesale simply meant that the items being purchased were for
resale or used as components of manufactured products that are sold.
Suppliers must be competitive one way or the other. Some suppliers
base their competitiveness on simply on price. Generally speaking,
these suppliers have fairly stringent requirements such as minimum
purchases to “qualify” customers who wish to buy from them. Some
suppliers base their competitiveness more on customer service, such
as technical expertise, education, etc., rather than price. Wholesale
doesn’t mean all suppliers sell to all customers at all the same
price.

Tim Sheriff

2

People people please stop crying in your wine. Be thankful you are
not a farmer. Everything you buy is RETAIL and everything you sell is
wholesale. BTW they don’t have the luxury of buying from someone
else. If you need a John Deer or a Case tractor, guess what? Retail
the same as you or the redneck down the road has to pay. There is no
keystone or double or god forbid triple keystone. In any business
your prices are based on your overhead. That includes such things as
wages, health benefits rent stock etc. If your prices don’t cover
those things then you are simply underpricing your goods. Then you
have to decide if you are in this for a profit or for fun. As I was
taught “don’t begrudge another man his good fourtune. Get busy and
make your own”. Rio provides a service that we all need and a lot of
us use. They too have overhead that must be met, but they don’t have
to give their stuff away. I for one am happy to pay their prices for
the not just theproduct I’m buying but for the additional service
that I may receive if I need it. And BTW where else can you call for
technical assistance and not be charged an arm and a leg for. Would
you like lower prices but pay additional for Tech support or conflict
resolution? Count me in Rio’s corner on this one. They are fine folks
and provide great service to the customer.

John (Jack) Sexton

3

Hi

C'mon, have a heart, folks! It's not necessarily "willing to pay",
it's a "have no choice" situation for some of us. Here you people
have a bazillion suppliers to choose from for wholesale only, that
we cannot buy from, and yet you begrudge us poor hobbyists who
cannot buy wholesale, our one really good supplier!

It’s not about begrudging anyone. Many of the people on the list
have worked for years, spent thousands on classes, and thousands more
on inventory and equipment. The wholesale system is for those who are
in business. I don’t mean to put any one down. I know it’s difficult
to get a leg up when working in the jewelry industry, but the key
word here is “working”.

If I took up knitting tomorrow, would that mean I should have
unlimited access to wholesale pricing? Even if I sold a couple
scarves, should I be able to buy my yarn wholesale?

There is nothing magical about going to your state’s Department of
Revenue Services and obtaining a resale certificate. There isn’t
anything mystical about filing a sales tax return. If you would like
to buy wholesale, however, you do have to get in the game. Wholesale
is for business people, retail is for hobbyists.

4

To change the subject just a bit…

Why do the wholesalers exclude people? Is it just to avoid
collecting sales tax? I ask because one would think an easy solution
to wanting to give lower prices to “the trade” than retail purchasers
would be to base price on quantity. Anyone who buys quantities is
likely going to resell, in which case, they probably will (and
should) get a resale certificate; whereas others would pay more.

I make this point because I hate being excluded from shows just
because I’m basically still a student.

5 
When I save money buying something at a show, I still sell it as
if I bought it from my regular supplier. I do not lower the price,
I make more profit.

Which is good advise and common practice - don’t sell it by cost,
sell it by replacement cost. Same reason you pay today’s metal price
on findings, regardless of what they paid when it was made.

I used to shop at Rio when they had 400 sq. feet on Edith St. in
Albuquerque. I worked just around the corner on Central (Squash
Blossom), and Saul Bell ran the place. Eddie was my age, and was
essentially the manager-in-training. Those were the boom years for
the
turquoise business, and Rio took it for a ride. Then they moved to
Washington St. into a 50,000 sq.’ warehouse. Then they got robbed,
closed to the public, mail order only, and then now they have moved
to
Bluewater and a very low profile. The thing to understand about them
is that they come out of the silver business - also lapidary. When I
went there the only gold they carried was stock - sheet, solder, etc.
It’s not that they don’t know gold or anything, I’m talking about
roots. They are a fine company. For the gold business, though, I tend
to go to those who’s roots are in gold. For silver and lapidary, I go
to Rio - they probably ARE the best for that…

6

If you’re making items for “resale” you may not be a hobbyst.
Sometimes “hobbysts” have much higher profits than those who have
stores and galleries. The difference may be that those with
"licenses" have to pay Sales Taxes, and some hobbysts don’t feel
that they need to do that. We all have to buy supplies, we are all
looking for the best suppliers.

Happy Holidays to all!

7 
What is the concise definiton of "wholesale?"

Wholesale means you’re buying a whole lot. Some businesses require a
mimimum order; perhaps to guage you seriousness

8 
The wholesale system is for those who are in  business. I don't
mean to put any one down. I know it's difficult to get a leg up
when working in the jewelry industry, but the  key word here is
"working".

Why? It has always seemed to me unfair - whether in jewelry, home
furnishings, or anything else, refuse access to retail purchasers.
Charging the purchaser of one item more than the purchaser of many
items seems fairer. But if I am either a so-called “hobbyist” –
meaning I have another job to support myself? – or a student, why
should I not have access to the better materials? Speaking more
broadly – if, for example, I wish to purchase drapery fabric – why
should I not be able to purchase the same drapery fabric as an
interior designer? Just so that I am forced to hire the interior
designer to get me access to the fabric? I may not want or need an
interior designer.

From the vantage point of the wholesaler, why isn’t it happy to base
discounts from retail on volume? Why doesn’t this work for the retail
jeweler who purchases from the wholesaler, as well? From the point of
the consumer, why should he/she have to pay someone for acting
purely as a middleman?

9 
Why do the wholesalers exclude people? Is it just to avoid
collecting sales tax? I ask because one would think an easy
solution to wanting to give lower prices to "the trade" than
retail purchasers would be to base price on quantity. Anyone who
buys quantities is likely going to resell, in which case, they
probably will (and should) get a resale certificate; whereas others
would pay more.

According to the US Bureau of Labor Statistics:

Wholesale is the resale (sale without transformation) of new and
used goods to retailers, to industrial, commercial, institutional or
professional users, or to other wholesalers, or involves acting as an
agent or broker in buying merchandise for, or selling merchandise, to
such persons or companies.

Further definition:

Wholesale usually involves the sale of goods in large lots, raw or
semi-processed materials, or large-volume transactions

According to “Distribution Services.” Foreign Agricultural Service
(February 9, 2000).

Retailing consists of the sale of goods/merchandise for personal or
household consumption either from a fixed location such as a
department store or kiosk, or from a fixed location and related
subordinated services.

The business value in this model is very common-sense. Think about
the advice on this list about when you have items placed with a
gallery. If I have 4 of the same necklaces for sale, and a gallery
has 2 of them, priced at $400 each, it’s NOT in my best interest to
sell the other 2 on my website or at a show for $250, even if that’s
what the gallery paid me for them. I would be undercutting my
retailer, and setting up a really bad relationship. They have
additional costs of sales/promotions to sell my pieces, for example.

And if, for example, everyone could purchase “have it your way”
products from Stuller or the other to-the-trade suppliers at the same
price as those of us in the trade can, there would be no “trade” for
us to be in.

As retailers (even or especially those of us who create
one-of-a-kind pieces), we add value to the raw purchase in many ways,
prior to selling that item to the consumer. That’s the role of the
retailer (adding value). The value added can be:

  • Creation of new pieces based on the raw materials purchased

  • Education/Advice for customers so that they make good choices

  • Assemblage of various components into unique combinations

  • Convenience of gathering a diversity of goods into a single place
    … and anything else you can think of Your “job” as you break into
    this business is to become a retailer. Once you do that, you can
    purchase from wholesalers. The more you develop that relationship
    with a wholesaler, the higher your volume, and the better the price
    that they can pass along to you.

If you are a retailer (no matter your student status… I’ve been
doing this for a bunch of years at this point and STILL take classes
on a regular basis… but that doesn’t mean my student status defines
me within the trade), you have the same rights and responsibilities
as anyone else selling to the public. If you are selling at retail
shows, that’s appropriate. If you’re trying to become a WHOLESALER
(doing the wholesale shows), you have to be able to demonstrate your
capability to fit the definition of a wholesaler…quantity, ability
to reliably service accounts, etc.

On the other hand, if you’re talking about ATTENDING wholesale
shows, again, you have to show that you truly are a retailer and will
do enough volume business with the trade suppliers that it’s worth
their costs to deal with you… it’s not worth the bookkeeping costs
for them to service a one-tiny-order-a-year account. That means
setting yourself up professionally with a business/sales license (if
required in your locality), business cards, and a track record of
selling to the public. If you can meet those criteria, you can
register and attend and purchase at the wholesale shows. Simple as
that.

Hope this helps to clarify things a bit.

Karen Goeller
www.nolimitations.com
No Limitations Designs
One-of-a-kind, Hand-Crafted Jewelry

10 
Why do the wholesalers exclude people? Is it just to avoid
collecting sales tax? I ask because one would think an easy
solution to wanting to give lower prices to "the trade" than retail
purchasers would be to base price on quantity. Anyone who buys
quantities is likely going to resell, in which case, they probably
will (and should) get a resale certificate; whereas others would
pay more.

This is completely wrong. Wholesale is not about quantity - it is
about destination. We buy jewelers tools and packaging materials at
retail because we are going to use them, not sell them. We buy
jewelry and findings at wholesale because we ARE going to resell them
or use them in an item that we are going to resell. Look at it this
way; Which of these two people deserves to buy at wholesale:

  1. A lady calls up a wholesaler and wants to buy 100 identical 10 by
    12 millimeter garnets to give as gifts for Christmas.

-= or =-

  1. A jeweler who needs to buy one 10 by 12 millimeter garnet to use
    in a custom necklace for a customer.

The first is a textbook case of a retail purchase, while the second
is equally obvious as a wholesale purchase.

Lee Cornelius
Vegas Jewelers

11

Retail businesses do not “pay” sales taxes. They are required to
"collect" sales taxes for a regulatory agency. When it comes to the
differences between a “hobby” business and a non-hobby business, the
IRS code spells it out pretty well. Hobby businesses produce passive
income and can’t deduct business expenses beyond the income produced
by the business. Non-hobby businesses on the other hand, produce
active income and can deduct business expenses beyond the income
produced by the business. The line between the two can get quite
fuzzy at times though.

12 
I ask because one would think an easy solution to wanting to give
lower prices to "the trade" than retail purchasers would be to base
price on quantity. Anyone who buys quantities is likely going to
resell,

From what I have read here though, much of the work being done is
custom. If a customer came to you and wanted a pair of amethyst
earrings (for example) you wouldn’t want to be in a situation where
you had to order 100 pairs of studs just to satisfy one order.

in which case, they probably will (and should) get a resale
certificate;

If you are reselling you have to get a resale license. It’s not
optional.

I make this point because I hate being excluded from shows just
because I'm basically still a student.

You don’t have to be excluded as far as I know. If I knew what state
you were in, I could point you in the right direction. There isn’t
any reason why (if you are a reseller) you cannot buy at wholesale
shows. If you would like, give more info on yourself and I (or
someone on the list) can help you

13

Hi

If you're making items for "resale" you may not be a hobbyst.

Not to confuse things, but, when I think of hobby vs. work, career,
professional, I think of the IRS definition. That is, anyone who
works more than 400 hours per year at their craft/art is in business
if that person is collecting anything in exchange for the artwork
they are producing… You are classed as a hobby by the IRS,
definitively, if you spend less than this amount per year “working”.
Moreover, the only difference here is that a hobby cannot declare a
loss, only a business can declare a loss. In other words, hobby
losses can only be deducted against hobby gains. I hope I am not
being confusing.

Sometimes "hobbysts" have much higher profits than those who have
stores and galleries.

If you were making much higher profits than galleries, you would
probably be spending a lot of time doing so. (ie. more than 400
hours per year). Therefore, you cannot legally call yourself a hobby
anymore.

The difference may be that those with "licenses" have to pay Sales
Taxes,

The buyer pays the sales tax. The artist collects the sales tax on
the state’s behalf and then pays it over to the state at the
appropriate time. Sales tax collected is not part of revenue and does
not have any effect on the bottom line.

and some hobbysts don't feel that they need to do that.

If you are making things and then selling them, you do need to get
the appropriate resale license and file a timely sales tax return,
regardless of whether you feel like you need to. It’s required by
law.

It’s not difficult to obtain a resale license. The Department of
Revenue Services for the individual state would be the place to go.
There is usually a small fee. You may only need to file a return once
a year (depending on your level of sales) and sales tax returns can’t
be easier to fill out. You don’t need to be working full time. You
can be a student and still get a resale license.

Though I am no longer a working accountant, I would be more than
happy to try to answer any question regarding tax issues or licenses
or whatever. Feel free to email on or off. I’m no Einstein, but I
will try my best.

14 
There is nothing magical about going to your state's Department of
Revenue Services and obtaining a resale certificate. There isn't
anything mystical about filing a sales tax return. If you would
like to buy wholesale, however, you do have to get in the game.
Wholesale is for business people, retail is for hobbyists.

Thanks for that, Kim!

Someone posted that getting a resale license is difficult (sorry to
paraphrase I already deleted the post). Well, running a business is
difficult. Filing business and personal taxes is difficult.
Balancing design time and production time and marketing time is
difficult… Get the picture? These are the things that are
important and necessary to running a business. No resale certificate,
no wholesale price. Simple.

One thing that really irks me is when I do a wholesale show and talk
to another jewelry designer and they tell me that they don’t charge
labor because that would make their price too high. Now, that
doesn’t effect me because of my original castings, it’s usually
someone just starting out that needs to learn better. But it’s still
annoying. If you’re not charging labor you are not a real business,
you are a hobbyist. You could not cover your overhead without
charging labor. You will not make any money and your business will
not survive. You have a “real job” that pays your bills, this is what
you do on the weekends. I’m not knocking that, I did it for years. I
built up a client base while having another job to pay the bills and
keep a roof over my head. But I paid my dues and spent too much on
certain supplies because I was not a real business. I did not
complain about it, that’s the way it was. I accepted it. It gave me
something to aspire to. My goal was to one day be a real business.

I am not trying to be snobby about this. I’m just telling it like it
is. A business is different from a hobby. If it’s your hobby you
should not be entitled to the same perks and benefits that a
business receives. There needs to be some separation here. We’re
trying to make a living doing what someone as a hobbyist does for
fun.

Amery

15 
C'mon, have a heart, folks! It's not necessarily "willing to pay",
it's a "have no choice" situation for some of us. Here you people
have a bazillion suppliers to choose from for wholesale only, that
we cannot buy from, and yet you begrudge us poor hobbyists who
cannot buy wholesale, our one really good supplier!

Having first been a student, then a “pro,” and now a hobbyist, I
agree–please don’t try to take Rio away from us!

There is a way to make money with Rio, too–if you get their triple
keystone catalog. When I first sat down with that catalog and a
customer who wanted commission work, I felt guilty as hell. How could
I triple the price of a clasp?

I got over it!

Lisa Orlando
Albion, CA, US

16 
From the vantage point of the wholesaler, why isn't it happy to
base discounts from retail on volume? Why doesn't this work for the
retail jeweler who purchases from the wholesaler, as well?

Jewelers don’t always want or need to buy in quantity. It’s not
practical to buy 100 items (or even 5) to satisfy one special order.
The wholesale system is very helpful to those actually in the trade.
I feel like we’re beating a dead horse now.

From the point of the consumer, why should he/she have to pay
someone for acting purely as a middleman?

I think you are getting into an area now where some reading are
going to get quite riled up. When someone spends many years
perfecting techniques, thousands of dollars on tools and education,
and much thought and time on the completion of an order…that person
is not acting as merely a “middleman”. These are highly skilled
craftspeople who are quite proud (and should be).

If you would like to dedicate yourself to working as hard as you can
on your skill sets, spending all of your extra cashflow on tools,
equipment, and classes, and then spend possibly years building a
client base, then you too can enjoy all of the benefits of the
wholesale system just like they do.

Not everything in life comes easy. There is much to be said for hard
work and dedication here.

17

The difference may be that those with “licenses” have to pay Sales
Taxes,

The buyer pays the sales tax. The artist collects the sales tax on
the state's behalf and then pays it over to the state at the
appropriate time. Sales tax collected is not part of revenue and
does not have any effect on the bottom line.

So when you’re filling out your schedule C and you put down your
gross income, you’ve already subtracted the sales tax you’ve
collected and paid to the states. Since it was never yours in the
first place. Or is there some other place you put it?

Janet Kofoed
http://users.rcn.com/kkofoed

18 
From the point of the consumer, why should he/she have to pay
someone for acting purely as a middleman?

To effectively sell retail (meaning to the end consumer) requires a
very different business model from that of a wholesaler. Retail
customers demand frills… Frills like selection, advice, comfy
convenient environment, reputation, time spent holding your hand,
etc. These things cost hard money.

In the example you give of the interior designer… that designer
spends time with you, as the client, to select which fabric to use as
part of an overall scheme. You pick their brain for aestetic and
technical judgments. Using the designer would hopefully assure you of
a better outcome than if you eeny meeny minny moe it by yourself. The
designer brings that certain intangible.You will probably hold the
designer accountable for errors and adjustments. And that designer
brings future business to the supplier. How much future biz are you
going to bring?

So this interior designer is investing in you. Possibly before
she/he even sees the first check. The simple middleman brings added
value.

The solution is very simple, as has been pointed out…get a resale
number. But with it come the headaches of being legitimate.

But if I am either a so-called "hobbyist" -- meaning I have
another job to support myself? -- or a student, why should I not
have access to the better materials?

To be frank, and excuse me for this, while you may be serious about
developing yourself the wholesaler will not take you as serious
because its not your livelihood. He wants to deal with professionals
who will build his business.

19

to be a wholesale purchaser you must have a certificate from the
Department of Revenue in your state,and in california a nd some
other states a certificate of resale intent as well, and a federal
EIN #( which if you go the site any individual that has a social
security number can get). according the the federal trade commision,
not the IRS, or dept. of revenue, one must make over 2500.00 in most
states, and i believe 6,000 in certain classes of trade relative and
specific to the “industry of jewelry making” as a whole; which means
there are different numbers and income levels for gemstone sales,
precious metals dealers, chemical refining of precious /non-ferrous
metals, resale of strung beads or other predrilled objects, the sale
of temporarily strung beads or other objects,cultured pearl
import/export and resale, welding soldering and brazing, marketing
and graphic design,suppliy tool and equipment manufacturers,tool and
equipment resellers,casting of bas emetals, casting of precious
metals for resale,metal milling…the point is there are totally
specific and spelled out levels of business…that a person,
partnership, agency, corporation or other group of people or
individuals that derrive a profit from must meet or they are not
considered a wholesaleer/ wholesale business, or more specifically
RESELLER…that does not mean that an individual cannot buy
wholesale…And there is the difference. Anyone with an EIN and a tax
number from at least one state-preferably their state of residence,
although some people who apparently like to pay taxes, have
certificates for each state in which they sell their wares- or go
through galleries, or other agents in other locations that collect
federal sales taxes and state taxes on the goods and services they
aell ifor the creator of the end product- be it custom made jewelry
or bags of jump rings with a header card. for hanging and brand
promotion.Generally someone with net 30 accounts in place can get
credit from companies that supply materials equipment and
consultation to all manner of metalsmiths, jewelers, …and even
wire-wrappers! so either you do have credit or you don’t…it’s all
based on how much you are willing to give the government
and the FTC rules for the specific category you r PRODUCT falls
into…as i said anyone can get a federal Employee Identification
Number (EIN)…you don’t ever have to use it-just to posess it.that is
the key to establishing wholesale credit in most cases…along with
trade references from companies you have purchased goods from and
have established accounts with that are themselves resellers…One
voluntarily pays income taxes, one is required to collect sales taxes
in the state the seller resides in I believe that’s true in all
contiguous states, however,territories,protectorates and possessions
have another set of additional rules-duty taxes, or customs (
i.e.guam,the us virgin islands, )…and if one sells in those locales
directly is responsible for those additional fees regardless of where
you have your studio/business located provided you derrive enough
income from those sales to have to report them as income at all…

except for a few individuals in this trade who would probaly refute
that they do not know everything there is to know about metallurgy,
and the industry, art and science of metalsmithing,jewelrymaking, or
whatever you term your affiliation with the task of creating jewelry
or wearable art or the supplies and tools with which to execute the
related tasks, or distribute them,or even educate others in the same
–we are all students here on an ongoing basis…some more
experienced , others less so…in the end it all boils down to account
holders and the extension of net 30 terms…you either meet the
criteria, or not…no one is more advanced because they paid the
federal government taxes and are thereby Legally Entitled to purchase
wholesale ggods. .Read on if you are still uncertain of wether or not
you think you should be allowed to buy as a wholesale entity:

You will need an EIN if you answer “Yes” to any of the following
questions. For your convenience, clicking on the “Yes” option will
take you directly to How to apply for an EIN.

Additionally, if you provide health insurance for your employees,
you may need a National Standard Employer Identifer (NSEI) for your
electronic health transactions. To determine if you need an NSEI,
refer to the Department of Health and Human Services’ NSEI
frequently asked questions.

Do you have employees?

Do you operate your business as a corporation or a partnership?

Do you file any of these tax returns: Employment, Excise, or
Alcohol, Tobacco and Firearms?

Do you withhold taxes on income, other than wages, paid to a
non-resident alien?

Do you have a Keogh plan?

Are you involved with any of the following types of organizations?

  • Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt
    Organization Business Income Tax Returns

  • Estates

  • Real estate mortgage investment conduits

  • Non-profit organizations

  • Farmers’ cooperatives

  • Plan administrators

20

Hi Janet

So when you're filling out your schedule C and you put down your
gross income, you've already subtracted the sales tax you've
collected and paid to the states. Since it was never yours in the
first place. Or is there some other place you put it?

Correct, here is a sample entry to record a sale:

Say you collect 42.00 from a customer, 40.00 is for merchandise and
2.00 is for sales tax. The entry is to debit cash for 42.00, credit
sales for 40.00, and credit sales tax payable for 2.00.

The cash account and the sales tax payable account are both on the
balance sheet. The sales account is on the income statement. That’s
what I was referring to when I said “sales tax collected does not
have an effect on sales”.

If you set up your books on a program like Quickbooks or something,
then, at the end of each quarter, you would fill out your sales tax
return and only need to fill in the number that is sitting in your
“sales tax payable” account.

Best,
Kim