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Question about selling pc components from manufacturer..

FortFunFoSho

Golden Member
Hey all. My friend and i would like to start a business where we design computers for people. Its your basic custom computer type business.

My questions is, how do I go about opening the lines between our company and the companies who produce the products (intel, amd, crucial, etc..).

Basically how do we go about buying the products at wholesale?

Any and all help is much appreciated.

Thank you.
 
Good luck is all I have to say. When buying parts they expect you to buy like a minimum of 10 things if not more. You may want to rethink this because when selling a computer, you will be called upon to provide tech support.
 
Yes true.

So in order to buy direct there is always a minimum?

How come when local companies don't have a product they can just overnight it?

 
You'll need a license to get your tax ID number then you'll most likely be dealing with Distributors and not OEM's themselves unless they extend an invite to you to join them in whatever small business partnership they're offering.

Oh, not all distributors are created equal either, some will compete more aggresively than others for your account. I had an outfit called sunnytech call me the other day wanting to go over new pricing structures and offering to beat Micro Computer
Center prices on all of my system building needs with lower bulk quantity purchases required for discount.


Everybody's hurting in IT these days and if you shop around you can get good prices in the channel,particularly if you're an active account no matter how small your company.
 


<< How come when local companies don't have a product they can just overnight it? >>


Because they already have a relationship with their distributor from having ordered in quantity in the past. Most distributors have provisions to do single items occasionally for their regular customers.

There are a few people on here that have been in similar businesses in the past and they usually chime in and say that the prices you can get from newegg and the like are usually cheaper than going through a distributor unless you are buying in very large quantities.

 


<<

<< How come when local companies don't have a product they can just overnight it? >>


Because they already have a relationship with their distributor from having ordered in quantity in the past. Most distributors have provisions to do single items occasionally for their regular customers.

There are a few people on here that have been in similar businesses in the past and they usually chime in and say that the prices you can get from newegg and the like are usually cheaper than going through a distributor unless you are buying in very large quantities.
>>




Actually that depends on the shipping, I can get cases locally far cheaper than I can online and would rather buy cpu's and mb's locally as well ,if I get a dead one it replaced in under an hour,no shipping needed.
 


<< Actually that depends on the shipping >>


That's true in many cases but what I was pointing out was the fact that unless he plans to buy in large quantities, the prices from some of the larger online vendors are usually about the same or cheaper than purchasing from a distributor in small quantities.

 


<<

<< Actually that depends on the shipping >>


That's true in many cases but what I was pointing out was the fact that unless he plans to buy in large quantities, the prices from some of the larger online vendors are usually about the same or cheaper than purchasing from a distributor in small quantities.
>>




well, I can get wid mid tower cases with decent 300 watt psu's for under $35 apiece locally with costs occasionally as low as $29 if I buy in lots of 5 or more, Shipping/packaging costs and the turn around time to get DOA items from an online vendor must also be factored into the cost before making your purchasing choices. Telling the wrong client that their order's going to be delayed a week to 10 days due to RMA issues can cost you a lot more than you save by buying online.


Don't get me wrong, I'll jump on a hot deal but do so mostly for stock items or things I know I can move to a client for a good profit.
 
So then after having some questions answered. Would it be agreed upon that perhaps the best step for us (just starting out) would be to use the big guys like newegg?

Comments? Ideas?
 


<< So then after having some questions answered. Would it be agreed upon that perhaps the best step for us (just starting out) would be to use the big guys like newegg?

Comments? Ideas?
>>



Are you going to get a TAX ID right from the start or wait ? Hve you done any research as to what distributors are in your area and their pricing structures/rma polices ?
 


<< My questions is, how do I go about opening the lines between our company and the companies who produce the products (intel, amd, crucial, etc..). >>

As already mentioned, you need to get a sales tax or reseller ID license from your state. This license or permit can be called a few different things, depending upon the state, but generally it is referred to as a sales tax license. What it does is designate your business as a reseller of merchandise, and thus you may purchase from wholesalers without having to pay your state sales tax. However, you must COLLECT sales tax from the end-users who purchase from you, then remit it back to the state.

It took me eight (8!) weeks to get my state tax license, good old government efficiency. But, before you apply for your sales tax license, you should apply for a business permit known as DBA (Doing Business As). This is usually done at your county courthouse and it takes no longer than a few days, usually an hour or two.

A DBA is a must if you want to use a name for your business other than your own name. It essentially allows John H. Smith (example name) to do business as "JHS Computers", or whatever name you want for your business (provided it isn't already taken by someone else in your county). If you open a P.O. Box or small business checking account, its far more professional to open the account under "JHS Computers" instead of John H. Smith. To do that, you'll need to show the Post Office and bank your DBA. However, a DBA isn't an absolute requirement to get started, a sales tax license is.

The reason I suggested getting the DBA first is so that you can apply for your sales tax license under your DBA name. If you do it in the reverse order, you may not get the DBA name you want because it might already be taken. Best to get the DBA first, then the sales tax license.

While you're waiting for your sales tax license and ID number, just visit the manufacturer websites of the products you want to sell. Find a link to their OEM or reseller pages, then inquire about a reseller account or privileges. Intel used to call this an IPD - Intel Processor (or Product) Dealer. I'm not sure what they call it now.

Microsoft has some other title like System Builder, System Integrator, Value Added Reseller (VAR), or something like that. If there are no OEM or reseller links that you can see, just use their regular sales or marketing email contacts to inquire. You want to apply or register with that manufacturer as an authorized reseller of their products.

When I had a business, Microsoft and Intel enforced a minimum sale requirement to retain your reseller status that went into effect 30 days from the date of your first order. Intel was something like 10 retail processors a month. I don't know what it is now, or even if they still have a minimum requirement. Most manufacturers don't care.

Typically this is a pro forma process and the manufacturer doesn't care whether or not you already have a sales tax license, because you won't be buying from them, anyway. You will be buying from their authorized distribution partners. It is the distributor who will insist on having a copy of your sales tax license before they will sell to you.

The manufacturer will give you a list of their authorized distributors and you then inquire with them about opening a reseller account. That's about it. Once you're approved, the distributor will send you their product line information, catalogs (print or online), sales rep information, etc.

As someone already noted, just about any distributor will sell in small quantities (five units or less), but they don't like to. Most are catering to the medium to large quantities, and that's where the wholesale discount is. At one time, I had reseller accounts with Tech Data, Ingram Micro, SED, SuperCOM, among a few others, and I was shocked when I was quoted a HIGHER price than I could get online from a volume reseller. I know the rule of commerce is 'the more you buy, the cheaper each unit is', and so I wasn't expecting a huge discount, but I surely didn't expect "wholesale" prices to be MORE than retail!!

I would have been happy to get enough of a discount so that I could match retail prices (after the freight charge), breaking even. Not a chance if you're buying small quantities. So, if you're not dropping at least several thousand dollars on each inventory purchase, good luck!

A bit of advice: unless you have a wad of capital and credit, don't even entertain the possibility that you can compete with Newegg, TigerDirect, Fry's Electronics, etc. in terms of component pricing. I went several thousand dollars in the hole trying, before I went under. The only way small resellers have a chance is to break even on parts and make their money on the service/labor end of the business.
 
Wow.

Thank you so much for all yoour help. I think I will be sticking mainly to just piecing together parts from newegg. I appreciate everyone's help.

Thanks again!
 
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