You’ve heard the saying from the financial gurus who tell you that the investor makes a profit when they buy, not when they sell. Sounds contradictory but it holds true as long as you are buying below the market price and you have the ability to sell in a relatively short period of time. For example, Bill buys a pair of 500-piece wholesale jewelry lots from Ken for $2 per jewelry piece (or a total of $2,000). If Bill can procure a buyer for $2.50 per jewelry piece (a total of $2,500) then he will make a profit. So in theory, Bill was able to lock in his profit on the $2,000 purchase knowing he could sell for $2,500. Sounds like a good plan. This could be an example of Bill buying wholesale and selling retail. Or maybe he is a very shrewd business man. However, it is unlikely that he could flip his wholesale purchase to another wholesale buyer. Not impossible, of course, but still not likely since most wholesale buyers are knowledgeable enough to understand the market value for the jewelry.

So if you are in the retail jewelry business and you make money be selling volume, it is in your best interest to buy wholesale jewelry lots instead of one piece at a time. The reason is very obvious. Businesses that sell jewelry in large quantities have an incentive to sell at a discount to move the jewelry. It’s like any other business that deals in wholesale goods. They have a large quantity of jewelry, for example, that they either manufactured or picked up on a steep discount. They have a specific profit margin they are looking for but they need to sell the wholesale jewelry at a certain price to get that profit. If you are a retailer, you will need to sell it for a bit more than the wholesale price so that you can make a profit. No reason to be in business if you can’t make a profit, right?